The zinc finger protein A20 is a tumor necrosis factor (TNF)- and interleukin 1 (IL-1)-inducible protein that negatively regulates nuclear factor-kappa B (NF-kappaB)-dependent gene expression. However, the molecular mechanism by which A20 exerts this effect is still unclear. We show that A20 does not inhibit TNF- induced nuclear translocation and DNA binding of NF-kappaB, although it completely prevents the TNF- induced activation of an NF-kappaB-dependent reporter gene, as well as TNF-induced IL-6 and granulocyte macrophage-colony stimulating factor gene expression. Moreover, NF-kappaB activation induced by overexpression of the TNF receptor-associated proteins TNF receptor-associated death domain protein (TRADD), receptor interacting protein (RIP), and TNF recep- tor-associated factor 2 (TRAF2) was also inhibited by expression of A20, whereas NF-kappaB activation induced by overexpression of NF-kappaB-inducing kinase (NIK) or the human T cell leukemia virus type 1 (HTLV-1) Tax was unaffected. These results demonstrate that A20 inhibits NF-kappaB-dependent gene expression by interfering with a novel TNF-induced and RIP- or TRAF2-mediated pathway that is different from the NIK-IkappaB kinase pathway and that is specifically involved in the transactivation of NF-kappaB. Via yeast two-hybrid screening, we found that A20 binds to a novel protein, ABIN, which mimics the NF-kappaB inhibiting effects of A20 upon overexpression, suggesting that the effect of A20 is mediated by its interaction with this NF-kappaB inhibiting protein, ABIN.