Proteolytic degradation of the C-terminal region of NF-(kappa)B precursors to their active DNA binding forms represents an important regulatory step in the activation of NF-(kappa)B. NF-(kappa)B2(p100) is found ubiquitously in the cytoplasm; however, the site and mechanism of processing to p52 have not previously been defined. We show by deletion mapping that processing of NF-(kappa)B2(p100) terminates at alanine 405 to generate p52 and is prevented by specific inhibitors of the multicatalytic proteinase complex. Although the C-terminal I(kappa)B-like domain of NF-(kappa)B2(p100) was constitutively phosphorylated, disruption of this phosphorylation by mutagenesis demonstrated that it was not required as a signal to mediate processing. Mutational analysis further showed that cleavage of NF-(kappa)B2 is not dependent on a specific sequence motif adjacent to alanine 405, the ankyrin repeats, or other C-terminal sequences but is directed by structural determinants amino terminal to the cleavage site, within the Rel homology domain and/or the glycine hinge region. The level of processing of NF-(kappa)B2(p100) was much lower than that of NF-(kappa)B1(p105) and differed from that of I(kappa)B-alpha, suggesting differential control of processing of NF-(kappa)B/I(kappa)B family members.