CyclosporineA is an immunosuppressive agent that is used clinically in the prevention of transplant rejection and development of graft-versus-host disease. Recently, cyclosporineA has been shown to possess anti-inflammatory properties and is capable of inhibiting lipopolysaccharide-induced NF-κB activation. Ubiquitin-mediated proteasomal proteolysis plays a critical role in signal-induced NF-κB activation since it regulates both IκB degradation and p105 processing, it is also involved in the production of peptides for the assembly of MHC classI molecules. We report here that cylcosporineA acts as an uncompetitive inhibitor of the chymotrypsin-like activity of the 20S proteasome in vitro and that it suppresses lipopolysaccharide-induced IκB degradation and p105 processing in vivo demonstrating that inhibition of proteasome proteolysis is the mechanism by which cyclosporineA prevents NF-κB activation. A structurally unrelated immunosuppressant, rapamycin, did not inhibit the 20S proteasome in vitro.