Deregulated nuclear factor kappaB (NF-kappaB) activation plays an important role in inflammation and tumorigenesis. ABIN proteins have been characterized as negative regulators of NF-kappaB signaling. However, their mechanism of NF-kappaB inhibition remained unclear. With the help of a yeast two-hybrid screen, we identified ABIN proteins as novel ubiquitin-interacting proteins. The minimal ubiquitin-binding domain (UBD) corresponds to the ABIN homology domain 2 (AHD2) and is highly conserved in ABIN-1, ABIN-2 and ABIN-3. Moreover, this region is also present in NF-kappaB essential modulator/IkappaB kinase gamma (NEMO/IKKgamma) and the NEMO-like protein optineurin, and is therefore termed UBD in ABIN proteins and NEMO (UBAN). Nuclear magnetic resonance studies of the UBAN domain identify it as a novel type of UBD, with the binding surface on ubiquitin being significantly different from the binding surface of other UBDs. ABIN-1 specifically binds ubiquitinated NEMO via a bipartite interaction involving its UBAN and NEMO-binding domain. Mutations in the UBAN domain led to a loss of ubiquitin binding and impaired the NF-kappaB inhibitory potential of ABINs. Taken together, these data illustrate an important role for ubiquitin binding in the negative regulation of NF-kappaB signaling by ABINs and identify UBAN as a novel UBD.