NF-B transcription factors are crucial regulators of inflammation, immunity, stress responses, and cell differentiation. Many studies have demonstrated that ubiquitination of IB kinase ␥ (IKK␥), a regulatory subunit of IKK, is instrumental in the activation of IKK and NF-B. We and others previously identified EGLN3, a member of a family of prolyl hydroxylases, as a negative regulator of the NF-B pathway. Here we report that EGLN3, but not EGLN1 or -2, interacts with and inhibits K63-linked ubiquitination of IKK␥. The effect appears to be related to inhibition of IKK␥ ubiquitination mediated by cIAP1 rather than to stimulation of IKK␥ deubiquitination by the deubiquitinases A20 and CYLD (cylindromatosis). EGLN3 does not affect the protein levels of cIAP1 or its E2 ubiquitin-conjugating enzymes UbcH5 and Ubc13. EGLN3 hydroxylase activity is not responsible for its effect on IKK␥ ubiquitination and NF-B signaling. Instead, interaction with IKK␥ is required for the ability of EGLN3 to inhibit IKK␥ ubiquitination and IKK-NF-B signaling. EGLN3 competes with cIAP1 for IKK␥ binding, leading to inhibition of cIAP1-IKK␥ interaction, IKK␥ ubiquitination, and IKK-NF-B signaling. This study provides novel insights into EGLN3 function and sheds new light on the regulation of IKK␥ ubiquitination and NF-B.