We previously showed that treatment with bacterial lipopolysaccharide (LPS) or pro-inflammatory cytokines decreases NO-sensitive guanylyl cyclase (GC(NO)) activity in astrocytes by decreasing the half-life of the obligate GC(NO) beta1 subunit in a NO-independent but transcription- and translation-dependent process. Here we show that LPS-induced beta1 degradation requires proteasome activity and is independent of NFkappaB activation or beta1 interaction with HSP90. Immunocytochemistry and confocal microscopy analysis revealed that LPS promotes colocalization of the predominantly soluble beta1 protein with ubiquitin and the 20S proteasome in nuclear aggregates that present characteristics of clastosomes, nuclear bodies involved in proteolysis via the ubiquitin-proteasome system. Proteasome and protein synthesis inhibitors prevented LPS-induced clastosome assembly and nuclear colocalization of beta1 with ubiquitin and 20S proteasome, strongly supporting a role for these transient nuclear structures in GC(NO) down-regulation during neuroinflammation.