The NF-κB transcription factor has a central role in diverse processes, including inflammation, proliferation and cell survival, and its activity is dysregulated in diseases such as autoimmunity and cancer. We recently identified the TRE17/ubiquitin-specific protease 6 (USP6) oncogene as the first de-ubiquitinating enzyme to activate NF-κB. TRE17/USP6 is translocated and overexpressed in aneurysmal bone cyst (ABC), a pediatric tumor characterized by extensive bone degradation and inflammatory recruitment. In the current study, we explore the mechanism by which TRE17 induces activation of NF-κB, and find that it activates the classical NF-κB pathway through an atypical mechanism that does not involve IκB degradation. TRE17 co-precipitates with IκB kinase (IKK), and IKK activity is augmented in stable cell lines overexpressing TRE17, in a USP-dependent manner. Optimal activation of NF-κB by TRE17 requires both catalytic subunits of IKK, distinguishing its mechanism from the classical and non-canonical pathways, which require either IKKβ or IKKα, respectively. TRE17 stimulates phosphorylation of p65 at serine 536, a modification that has been associated with enhanced transcriptional activity and nuclear retention. Induction of S536 phosphorylation by TRE17 requires both IKKα and IKKβ, as well as the IKKγ/NEMO regulatory subunit of IKK. We further demonstrate that TRE17(long) is highly tumorigenic when overexpressed in NIH3T3 fibroblasts, and that inhibition of NF-κB significantly attenuates tumor formation. In summary, these studies uncover an unexpected signaling mechanism for activation of classical NF-κB by TRE17. They further reveal a critical role for NF-κB in TRE17-mediated tumorigenesis, and suggest that NF-κB inhibitors may function as effective therapeutic agents in the treatment of ABC.