The classical nuclear factor κB (NF-κB) signaling pathway is under the control of the IκB kinase (IKK) complex, which consists of IKK-1, IKK-2, and NF-κB essential modulator (NEMO). This complex is responsible for the regulation of cell proliferation, survival, and differentiation. Dysregulation of this pathway is associated with several human diseases, and as such, its inhibition offers an exciting opportunity for therapeutic intervention. NEMO binding domain (NBD) peptides inhibit the binding of recombinant NEMO to IKK-2 in vitro. However, direct evidence of disruption of this binding by NBD peptides in biological systems has not been provided. Using a cell system, we expanded on previous observations to show that NBD peptides inhibit inflammation-induced but not basal cytokine production. We report that these peptides cause the release of IKK-2 from an IKK complex and disrupt NEMO-IKK-2 interactions in cells. We demonstrate that by interfering with NEMO-IKK-2 interactions, NBD peptides inhibit IKK-2 phosphorylation, without affecting signaling intermediates upstream of the IKK complex of the NF-κB pathway. Furthermore, in a cell-free system of IKK complex activation by TRAF6 (TNF receptor-associated factor 6), we show that these peptides inhibit the ability of this complex to phosphorylate downstream substrates, such as p65 and inhibitor of κBα (IκBα). Thus, consistent with the notion that NEMO regulates IKK-2 catalytic activity by serving as a scaffold, appropriately positioning IKK-2 for activation by upstream kinase(s), our findings provide novel insights into the molecular mechanisms by which NBD peptides exert their anti-inflammatory effects in cells.