The regulated expression of intercellular adhesion molecule-1 (ICAM-1) by cytokines such as tumor necrosis factor alpha (TNF-alpha) plays an important role in inflammation and immune responses. Induction of ICAM-1 gene transcription by TNF-alpha has previously been shown to be dependent upon a region of the ICAM-1 5'-flanking sequences that contains a modified kappaB site. We demonstrate here that this modified kappaB site alone is insufficient for induction of transcription by TNF-alpha. Site-directed mutagenesis of both the kappaB site and specific flanking nucleotides demonstrates that both the specific 5'- and 3'-flanking sequences and the modified kappaB site are necessary for TNF-alpha induction. Further, site-directed mutagenesis of this modified kappaB site to a consensus kappaB site allows it to mediate transcriptional activation in response to TNF-alpha, even in the absence of specific flanking sequences. Transcription through this minimal ICAM-1 TNF-alpha-responsive region can be driven by co-expression of p65, and the minimal response element interacts with p65 and p50 in supershift mobility shift assays. However, when in vitro transcription/translation products for the Rel proteins are used in an electrophoretic mobility shift assay, only p65 is capable of binding the minimal response element while both p50 and p65 bind a consensus kappaB oligonucleotide. Additionally, in the absence of the specific flanking nucleotides, the ICAM-1 kappaB site is incapable of DNA-protein complex formation in both electrophoretic mobility shift assay and UV cross-linking/SDS-polyacrylamide gel electrophoresis analysis. These results demonstrate the requirement for specific flanking sequences surrounding a kappaB binding site for functional transcription factor binding and transactivation and TNF-alpha-mediated induction of ICAM-1.