The oncoprotein BCL-3 is a nuclear transcription factor that activates NF-kappaB target genes through formation of heterocomplexes with p50 or p52. BCL-3 is phosphorylated in vivo, but specific BCL-3 kinases have not been identified so far. In this report, we show that BCL-3 is a substrate for the protein kinase GSK3 and that GSK3-mediated BCL-3 phosphorylation, which is inhibited by Akt activation, targets its degradation through the proteasome pathway. This phosphorylation modulates its association with HDAC1, -3, and -6 and attenuates its oncogenicity by selectively controlling the expression of a subset of newly identified target genes such as SLPI and Cxcl1. Our results therefore suggest that constitutive BCL-3 phosphorylation by GSK3 regulates BCL-3 turnover and transcriptional activity.