Inhibitor of differentiation or DNA binding-1 (ID1) is an important helix-loop-helix (HLH) transcription factor involved in diverse biological functions including cell differentiation, proliferation, apoptosis, and senescence. Recently, it was reported that ID1 can activate the NF-κB signaling pathway in a variety of cancer cells and a T cell line, but the mechanisms involved in ID1-mediated transactivation of NF-κB are not clear. In this study, we demonstrate by both in vitro pull-down assays and a cell-based in vivo two-hybrid system that ID1-mediated NF-κB activation is due to its physical interaction with p65. We have identified that the transcriptional activation domain (TAD) in p65 and the HLH domain in ID1 are vital for their interaction. Interestingly, a single site mutation (Leu76) in the HLH domain of ID1 protein drastically decreased its ability to bind with p65. Using a dual-luciferase assay, we demonstrated that the interaction between ID1 and p65 modulates activation of the NF-κB signaling pathway in vivo. In addition, we demonstrated that, by affecting the nuclear translocation of p65, ID1 is essential in regulating TNF-α-induced p65 recruitment to its downstream target, the cellular inhibitor of apoptosis protein 2 (cIAP2) promoter.