Toll-like receptors (TLRs) trigger the production of inflammatory cytokines and shape adaptive and innate immunity to pathogens. We report the identification of B cell leukemia (Bcl)–3 as an essential negative regulator of TLR signaling. By blocking ubiquitination of p50, a member of the nuclear factor (NF)-κB family, Bcl-3 stabilizes a p50 complex that inhibits gene transcription. As a consequence, Bcl-3–deficient mice and cells were found to be hypersensitive to TLR activation and unable to control responses to lipopolysaccharides. Thus, p50 ubiquitination blockade by Bcl-3 limits the strength of TLR responses and maintains innate immune homeostasis. These findings indicate that the p50 ubiquitination pathway can be selectively targeted to control deleterious inflammatory diseases.