B cell homeostasis is regulated by multiple signaling processes, including nuclear factor-kappaB (NF-kappaB), BAFF-, and B cell receptor signaling. Conditional disruption of genes involved in these pathways has shed light on the mechanisms governing signaling from the cell surface to the nucleus. We describe a novel mouse strain that expresses solely and excessively a naturally occurring splice variant of CYLD (CYLD(ex7/8) mice), which is a deubiquitinating enzyme that is integral to NF-kappaB signaling. This shorter CYLD protein lacks the TRAF2 and NEMO binding sites present in full-length CYLD. A dramatic expansion of mature B lymphocyte populations in all peripheral lymphoid organs occurs in this strain. The B lymphocytes themselves exhibit prolonged survival and manifest a variety of signaling disarrangements that do not occur in mice with a complete deletion of CYLD. Although both the full-length and the mutant CYLD are able to interact with Bcl-3, a predominant nuclear accumulation of Bcl-3 occurs in the CYLD mutant B cells. More dramatic, however, is the accumulation of the NF-kappaB proteins p100 and RelB in CYLD(ex7/8) B cells, which, presumably in combination with nuclear Bcl-3, results in increased levels of Bcl-2 expression. These findings suggest that CYLD can both positively and negatively regulate signal transduction and homeostasis of B cells in vivo, depending on the expression of CYLD splice variants.