The surface levels of major histocompatibility complex class I antigens are diminished on tumorigenic adenovirus type 12 (Ad12)-transformed cells, enabling them to escape from immunosurveillant cytotoxic T lymphocytes (CTLs). This is due to the down-regulation of the class I transcriptional enhancer, in which there is strong binding of the repressor COUP-TFII and lack of binding of the activator NF-kappaB. Even though NF-kappaB (p65/p50) translocates to the nuclei of Ad12-transformed cells, it fails to bind to DNA efficiently due to the hypophosphorylation of the p50 subunit. In this study, tumor necrosis factor alpha (TNF-alpha) and interleukin 1beta (IL-1beta) were shown to promote degradation of the NF-kappaB cytoplasmic inhibitor IkappaBalpha and permit the nuclear translocation of a phosphorylated form of NF-kappaB that is capable of binding DNA. Interestingly, when Ad12-transformed cells were treated with TNF-alpha or IL-1beta, class I gene transcription substantially increased when transcriptional repression by COUP-TFII was blocked. This indicates that in cytokine-treated Ad12-transformed cells, COUP-TFII is able to repress activation of class I transcription by newly nucleus-localized NF-kappaB. Our results suggest that Ad12 likely employs a "fail-safe" mechanism to ensure that the transcription of class I genes remains tightly repressed under various physiological conditions, thus providing tumorigenic Ad12-transformed cells with a means of escaping CTL recognition and lysis.