The IKK [IkappaB (inhibitory kappaB) kinase] complex is a key regulatory component of NF-kappaB (nuclear factor kappaB) activation and is responsible for mediating the degradation of IkappaB, thereby allowing nuclear translocation of NF-kappaB and transcription of target genes. NEMO (NF-kappaB essential modulator), the regulatory subunit of the IKK complex, plays a pivotal role in this process by integrating upstream signals, in particular the recognition of polyubiquitin chains, and relaying these to the activation of IKKalpha and IKKbeta, the catalytic subunits of the IKK complex. The oligomeric state of NEMO is controversial and the mechanism by which it regulates activation of the IKK complex is poorly understood. Using a combination of hydrodynamic techniques we now show that apo-NEMO is a highly elongated, dimeric protein that is in weak equilibrium with a tetrameric assembly. Interaction with peptides derived from IKKbeta disrupts formation of the tetrameric NEMO complex, indicating that interaction with IKKalpha and IKKbeta and tetramerization are mutually exclusive. Furthermore, we show that NEMO binds to linear di-ubiquitin with a stoichiometry of one molecule of di-ubiquitin per NEMO dimer. This stoichiometry is preserved in a construct comprising the second coiled-coil region and the leucine zipper and in one that essentially spans the full-length protein. However, our data show that at high di-ubiquitin concentrations a second weaker binding site becomes apparent, implying that two different NEMO-di-ubiquitin complexes are formed during the IKK activation process. We propose that the role of these two complexes is to provide a threshold for activation, thereby ensuring sufficient specificity during NF-kappaB signalling.