TAK1 kinase is an indispensable intermediate in several cytokine signaling pathways including tumor necrosis factor, interleukin-1, and transforming growth factor-beta signaling pathways. TAK1 also participates in stress-activated intracellular signaling pathways such as osmotic stress signaling pathway. TAK1-binding protein 1 (TAB1) is constitutively associated with TAK1 through its C-terminal region. Although TAB1 is known to augment TAK1 catalytic activity when it is overexpressed, the role of TAB1 under physiological conditions has not yet been identified. In this study, we determined the role of TAB1 in TAK1 signaling by analyzing TAB1-deficient mouse embryonic fibroblasts (MEFs). Tumor necrosis factor- and interleukin-1-induced activation of TAK1 was entirely normal in Tab1-deficient MEFs and could activate both mitogen-activated protein kinases and NF-kappaB. In contrast, we found that osmotic stress-induced activation of TAK1 was largely impaired in Tab1-deficient MEFs. Furthermore, we showed that the C-terminal 68 amino acids of TAB1 were sufficient to mediate osmotic stress-induced TAK1 activation. Finally, we attempted to determine the mechanism by which TAB1 activates TAK1. We found that TAK1 is spontaneously activated when the concentration is increased and that it is totally dependent on TAB1. Cell shrinkage under the osmotic stress condition increases the concentration of TAB1-TAK1 and may oligomerize and activate TAK1 in a TAB1-dependent manner. These results demonstrate that TAB1 mediates TAK1 activation only in a subset of TAK1 pathways that are mediated through spontaneous oligomerization of TAB1-TAK1.