BACKGROUND: The ubiquitin system (Ub-system) can be defined as the ensemble of components including Ub/ubiquitin-like proteins, their conjugation and deconjugation apparatus, binding partners and the proteasomal system. While several studies have concentrated on structure-function relationships and evolution of individual components of the Ub-system, a study of the system as a whole is largely lacking. RESULTS: Using numerous genome-scale datasets, we assemble for the first time a comprehensive reconstruction of the budding yeast Ub-system, revealing static and dynamic properties. We devised two novel representations, the rank plot to understand the functional diversification of different components and the clique-specific point-wise mutual-information network to identify significant interactions in the Ub-system. CONCLUSIONS: Using these representations, evidence is provided for the functional diversification of components such as SUMO-dependent Ub-ligases. We also identify novel components of SCF (Skp1-cullin-F-box)-dependent complexes, receptors in the ERAD (endoplasmic reticulum associated degradation) system and a key role for Sus1 in coordinating multiple Ub-related processes in chromatin dynamics. We present evidence for a major impact of the Ub-system on large parts of the proteome via its interaction with the transcription regulatory network. Furthermore, the dynamics of the Ub-network suggests that Ub and SUMO modifications might function cooperatively with transcription control in regulating cell-cycle-stage-specific complexes and in reinforcing periodicities in gene expression. Combined with evolutionary information, the structure of this network helps in understanding the lineage-specific expansion of SCF complexes with a potential role in pathogen response and the origin of the ERAD and ESCRT systems.