Toll-like receptor (TLR)-mediated immune responses are downregulated by several mechanisms that affect signaling pathways. However, it remains elusive how TLR-mediated gene expression is differentially modulated. Here, we show that IκBNS, a TLR-inducible nuclear IκB protein, negatively regulates induction of a subset of TLR-dependent genes through inhibition of NF-κB activity. IκBNS-deficient macrophages and dendritic cells show increased TLR-mediated expression of genes such as IL-6 and IL-12p40, which are induced late after TLR stimulation. In contrast, IκBNS-deficient cells showed normal induction of genes that are induced early or induced via IRF-3 activation. LPS stimulation of IκBNS-deficient macrophages prolonged NF-κB activity at the specific promoters, indicating that IκBNS mediates termination of NF-κB activity at selective gene promoters. Moreover, IκBNS-deficient mice are highly susceptible to LPS-induced endotoxin shock and intestinal inflammation. Thus, IκBNS regulates inflammatory responses by inhibiting the induction of a subset of TLR-dependent genes through modulation of NF-κB activity.