The interaction between the 26 kDa yeast ubiquitin hydrolase (YUH1), involved in maintaining the monomeric ubiquitin pool in cells, and the 8.5 kDa yeast ubiquitin protein has been studied by heteronuclear multidimensional NMR spectroscopy. Chemical shift perturbation of backbone (1)H(N), (15)N, and (13)C(alpha) resonances of YUH1, in a YUH1-ubiquitin mixture and in a 35 kDa covalent complex with ubiquitin (a stable analogue of the tetrahedral reaction intermediate), was employed to identify the ubiquitin binding interface of YUH1. This interface mapped on the secondary structure of YUH1 suggests a wide area of contact for ubiquitin, encompassing the N-terminus, alpha1, alpha4, beta2, beta3, and beta6, coincident with the high specificity of YUH1 for ubiquitin. The presence of several hydrophobic clusters in the ubiquitin binding interface of YUH1 suggests that hydrophobic interactions are equally important as ionic interactions in contacting ubiquitin. The residues in the binding interface exhibit a high percentage of homology among the members of the ubiquitin C-terminal hydrolase family, indicating the well-conserved nature of the ubiquitin binding interface reported in this study. The secondary structure of YUH1, from our NMR studies, was similar to the recently determined structure of its human homologue ubiquitin C-terminal hydrolase L3 (UCH-L3), except for the absence of the helix H3 of UCH-L3. This region in YUH1 (helix H3 of UCH-L3) was least perturbed upon ubiquitin binding. Therefore, the binding interface was mapped onto the corresponding residues in the UCH-L3 crystal structure. A model for ubiquitin binding to YUH1 is proposed, in which a good correlation was observed for the lateral binding of ubiquitin to UCH-L3 (YUH1), stabilized by the electrostatic and hydrophobic interactions.