Osmotic stress activates MAPKs, including JNK and p38, which play important roles in cellular stress responses. Transforming growth factor-beta-activated kinase 1 (TAK1) is a member of the MAPK kinase kinase (MAPKKK) family and can activate JNK and p38. TAK1 can also activate IkappaB kinase (IKK) that leads to degradation of IkappaB and subsequent NF-kappaB activation. We found that TAK1 is essential for osmotic stress-induced activation of JNK but is not an exclusive mediator of p38 activation. Furthermore, we found that although TAK1 was highly activated upon osmotic stress, it could not induce degradation of IkappaB or activation of NF-kappaB. These results suggest that TAK1 activity is somehow modulated to function specifically in osmotic stress signaling, leading to the activation of JNK but not of IKK. To elucidate the mechanism underlying this modulation, we screened for potential TAK1-binding proteins. We found that TAO2 (thousand-and-one amino acid kinase 2) associates with TAK1 and can inhibit TAK1-mediated activation of NF-kappaB but not of JNK. We observed that TAO2 can interfere with the interaction between TAK1 and IKK and thus may regulate TAK1 function. TAK1 is activated by many distinct stimuli, including cytokines and stresses, and regulation by TAO2 may be important to activate specific intracellular signaling pathways that are unique to osmotic stress.