Identification of small-molecule inhibitors by high-throughput screening necessitates the development of robust, reproducible and cost-effective assays. The assay approach adopted may utilize isolated proteins or whole cells containing the target of interest. To enable protein-based assays, the baculovirus expression system is commonly used for generation and isolation of recombinant proteins. We have applied the baculovirus system into a cell-based assay format using NIK [NF-kappaB (nuclear factor kappaB)-inducing kinase] as a paradigm. We illustrate the use of the insect-cell-based assay in monitoring the activity of NIK against its physiological downstream substrate IkappaB (inhibitor of NF-kappaB) kinase-1. The assay was robust, yielding a signal/background ratio of 2:1 and an average Z' value of >0.65 when used to screen a focused compound set. Using secondary assays to validate a selection of the hits, we identified a compound that (i) was non-cytotoxic, (ii) interacted directly with NIK, and (iii) inhibited lymphotoxin-induced NF-kappaB p52 translocation to the nucleus. The insect cell assay represents a novel approach to monitoring kinase inhibition, with major advantages over other cell-based systems including ease of use, amenability to scale-up, protein expression levels and the flexibility to express a number of proteins by infecting with numerous baculoviruses.