Bcl-3 is a member of the family of IκB inhibitors. Unlike the classical, cytoplasmic IκBs, Bcl-3 does not inhibit RelA- or c-Rel-containing NF-κB transcription factor dimers. Instead, Bcl-3 can enter the nucleus and modulate NF-κB activity, although the underlying mechanism and physiologic function remain largely unknown. Here we identified Bcl-3 as a regulator of immunologic tolerance to self. In parallel with NF-κB2, Bcl-3 functions within stroma to generate medullary thymic epithelial cells, which are essential for negative selection of autoreactive T cells. Loss of both NF-κB2 and Bcl-3, but not either one alone, led to a profound breakdown in central tolerance resulting in rapid and fatal multiorgan inflammation. These data reveal extensive utilization of the NF-κB system to promote central tolerance in the thymus, in apparent contrast with the well-known roles of NF-κB to promote inflammation and autoimmunity in the periphery.