The ubiquitin pathway has been implicated in the regulation of the abundance of proteins that control cell growth and proliferation. We have identified and characterized a novel human ubiquitin isopeptidase, UBPY, which both as a recombinant protein and upon immunoprecipitation from cell extracts is able to cleave linear or isopeptide-linked ubiquitin chains. UBPY accumulates upon growth stimulation of starved human fibroblasts, and its levels decrease in response to growth arrest induced by cell-cell contact. Inhibition of UBPY accumulation by antisense plasmid microinjection prevents fibroblasts from entering S-phase in response to serum stimulation. By increasing or decreasing the cellular abundance of UBPY or by overexpressing a catalytic site mutant, we detect substantial changes in the total pattern of protein ubiquitination, which correlate stringently with cell proliferation. Our results suggest that UBPY plays a role in regulating the overall function of the ubiquitin-proteasome pathway. Affecting the function of a specific UBP in vivo could provide novel tools for controlling mammalian cell proliferation.