Inflammatory arthritis is associated with devastating joint tissue destruction and periarticular bone erosion. Although secreted products of infiltrating immune cells perpetuate the inflammatory response, the osteolytic component of this disease is a direct result of localized recruitment and activation of osteoclasts. Given that NF-κB plays a central role in both processes, the function of this transcription factor was examined. Using a mouse model of autoreactive Ig transfer that engenders inflammatory arthritis, we show numerous osteoclasts in the articular joint tissue associated with progressive periarticular osteolytic lesions. Moreover, cells retrieved from these joints exhibit heightened NF-κB activity. Importantly, direct administration of dominant negative*I-κB or tyrosine 42-mutated I-κB (Y42F*I-κB) proteins into mice before induction of the disease attenuates in vivo activation of the transcription factor. More importantly, these I-κB mutant forms significantly inhibit in vivo production of TNF and receptor activator of NF-κB ligand, and block joint swelling, osteoclast recruitment, and osteolysis. Thus, NF-κB appears to be the centerpiece of inflammatory-osteolytic arthritis and direct inhibition of this transcription factor by unique and novel I-κB mutant proteins blocks manifestation of the disease.