In the ubiquitin (Ub) pathway, proteins are ligated with polyUb chains and then are degraded by a 26 S protease complex. We describe an enzyme, called isopeptidase T, that acts on polyUb chains. It is a monomeric Ub-binding protein abundant in erythrocytes and reticulocytes. The activity of the isopeptidase is inhibited by iodoacetamide and Ub aldehyde. Treatment of the enzyme with Ub aldehyde increased its affinity for free Ub, indicating the existence of two different Ub-binding sites and cooperativity between the two sites. Isopeptidase T acts on polyUb-protein conjugates, but not on conjugates in which the formation of polyUb chains was prevented by the use of reductively methylated Ub or on abnormal polyUb chains formed with a mutant Ub that contains a Lys----Arg substitution at residue 48. The enzyme converts high molecular mass polyUb-protein conjugates to lower molecular mass forms with the release of free Ub, but not of free protein substrate. The lower molecular mass Ub-protein conjugate products are resistant to further action of the enzyme. Isopeptidase T stimulates protein degradation in a system reconstituted from purified enzyme components. The enzyme also stimulates the degradation of proteins ligated to polyUb chains by the 26 S protease complex. Preincubation of polyUb-protein conjugates with the isopeptidase did not much increase their susceptibility to proteolysis by the 26 S complex. On the other hand, preincubation of conjugates with the 26 S protease complex and ATP increased the release of free Ub upon further incubation with the isopeptidase. It thus seems that a role of this isopeptidase in protein breakdown is to remove polyUb chain remnants following the degradation of the protein substrate moiety by the 26 S complex.