Many proteins of the Rel family can act as both transcriptional activators and repressors. However, mechanism that discerns the 'activator/repressor' functions of Rel-proteins such as Dorsal (Drosophila homologue of mammalian NFκB) is not understood. Using genomic, biophysical and biochemical approaches, we demonstrate that the underlying principle of this functional specificity lies in the 'sequence-encoded structure' of the κB-DNA. We show that Dorsal-binding motifs exist in distinct activator and repressor conformations. Molecular dynamics of DNA-Dorsal complexes revealed that repressor κB-motifs typically have A-tract and flexible conformation that facilitates interaction with co-repressors. Deformable structure of repressor motifs, is due to changes in the hydrogen bonding in A:T pair in the 'A-tract' core. The sixth nucleotide in the nonameric κB-motif, 'A' (A(6)) in the repressor motifs and 'T' (T(6)) in the activator motifs, is critical to confer this functional specificity as A(6) → T(6) mutation transformed flexible repressor conformation into a rigid activator conformation. These results highlight that 'sequence encoded κB DNA-geometry' regulates gene expression by exerting allosteric effect on binding of Rel proteins which in turn regulates interaction with co-regulators. Further, we identified and characterized putative repressor motifs in Dl-target genes, which can potentially aid in functional annotation of Dorsal gene regulatory network.