The 26S proteasome degrades polyubiquitinated proteins by an energy-dependent mechanism. Here we define multiple roles for ATP in 26S proteasome function. ATP binding is necessary and sufficient for assembly of 26S proteasome from 20S proteasome and PA700/19S subcomplexes and for proteasome activation. Proteasome assembly and activation may require distinct ATP binding events. The 26S proteasome degrades nonubiquitylated, unstructured proteins without ATP hydrolysis, indicating that substrate translocation per se does not require the energy of hydrolysis. Nonubiquitylated folded proteins and certain polyubiquitylated folded proteins were refractory to proteolysis. The latter were deubiquitylated by an ATP-independent mechanism. Other folded as well as unstructured polyubiquitylated proteins required ATP hydrolysis for proteolysis and deubiquitylation. Thus, ATP hydrolysis is not used solely for substrate unfolding. These results indicate that 26S proteasome-catalyzed degradation of polyubiquitylated proteins involves mechanistic coupling of several processes and that such coupling imposes an energy requirement not apparent for any isolated process.