IFN-stimulatory gene factor 15 (ISG15) is a ubiquitin-like protein, which is conjugated to many cellular proteins. However, its role in protein degradation is unclear. Here, we show that ISG15 is highly elevated and extensively conjugated to cellular proteins in many tumors and tumor cell lines. The increased levels of ISG15 in tumor cells were found to be associated with decreased levels of polyubiquitinated proteins. Specific knockdown of ISG15 expression using ISG15-specific small interfering RNA (siRNA) was shown to increase the levels of polyubiquitinated proteins, suggesting an antagonistic role of ISG15 in regulating ubiquitin-mediated protein turnover. Moreover, siRNA-mediated down-regulation of the major E2 for ISG15 (UbcH8), which blocked the formation of ISG15 protein conjugates, also increased the levels of polyubiquitinated proteins. Together, our results suggest that the ISG15 pathway, which is deregulated during tumorigenesis, negatively regulates the ubiquitin/proteasome pathway by interfering with protein polyubiquitination/degradation. (Cancer Res 2006; 66(2): 921-8)