The transcription factor NF-kappaB (p50/p65) binds either a kappaB DNA element or its inhibitor protein, IkappaBalpha, but these two binding events are mutually exclusive. The reason for this exclusivity is not obvious from the available crystal structure data. The C-terminal PEST-like sequence of IkappaBalpha appears to be involved in the process, but it is located in both of the published X-ray structures of the IkappaBalpha/NF-kappaB complex at a significant distance away from the DNA contact loop in the NF-kappaB DNA-binding domain. We have used nuclear magnetic resonance spectroscopy and differential isotopic labeling to probe the interactions between the p50/p65 NF-kappaB heterodimer and IkappaBalpha in solution. Our measurements are able to resolve a local structural discrepancy between the two crystal structures, and we confirm that the primary interaction of the IkappaBalpha PEST domain is with the DNA-binding domain of the p65 subunit. Mutagenesis of key arginine residues in the DNA contact sequence results in the loss of specific interaction of the PEST sequence with the p65 subdomain. We conclude that the local structure of the IkappaBalpha/NF-kappaB complex in the region of the PEST sequence is consistent with a direct interaction of this acidic sequence with the basic DNA contact sequence in p65, thus reducing the affinity of NF-kappaB for DNA by a competitive mechanism that is still to be elucidated fully.