The proinflammatory cytokine IL-1 induces the biosynthesis of a number of immunologically important proteins during infection, tissue damage, and/or stress, in part through the activation of the transcription factor NF-kappaB. Signal transduction is initiated at the cell membrane by complex formation between extracellular IL-1 and the transmembrane IL-1R type I (IL-1RI) and IL-1R accessory protein (IL-1RAcP). The intracellular signaling cascade involves recruitment of two IL-1R-associated kinases, IRAK1 and IRAK2, and the adapter protein MyD88, events which are dependent on the intracellular domain of membrane-bound IL-1RAcP (mIL-1RAcP). In mouse liver, IL-1RAcP is expressed as a soluble protein (sIL-1RAcP), the function of which is unknown. We have cloned the human sIL-1RAcP and established by sequence analysis that the human sIL-1RAcP mRNA arises from alternative splicing of the IL-1RAcP gene (shown here to encompass 12 exons spanning more than 56 kb). Furthermore, we demonstrate that human HepG2 hepatoma cells express both mIL-1RAcP and sIL-1RAcP and that signal transduction in these cells is mediated through IRAK1, IRAK2, and MyD88. We show that phorbol esters induce a change in the pre-mRNA splice pattern such that sIL-1RAcP mRNA becomes the dominant form. Overexpression of a membrane-anchored fusion protein of sIL-1RAcP and MHC in HepG2 cells inhibits IL-1-mediated NF-kappaB activation, whereas coexpression of IL-1RI with membrane-anchored sIL-1RAcP restores the capacity of the cells to respond to IL-1. This suggests that sIL-1RAcP may act as an inhibitor of IL-1 by directly interacting with IL-1RI to abolish its capacity to transduce signal.