Herpes simplex virus type 1 (HSV-1) regulatory protein ICP0 stimulates lytic infection and the reactivation of quiescent viral genomes. These roles of ICP0 require its RING finger E3 ubiquitin ligase domain, which induces the degradation of several cellular proteins, including components of promyelocytic leukemia nuclear bodies and centromeres. ICP0 also interacts very strongly with the cellular ubiquitin-specific protease USP7 (also known as HAUSP). We have shown previously that ICP0 induces its own ubiquitination and degradation in a RING finger-dependent manner, and that its interaction with USP7 regulates this process. In the course of these studies we found and report here that ICP0 also targets USP7 for ubiquitination and proteasome-dependent degradation. The reciprocal activities of the two proteins reveal an intriguing situation that poses the question of the balance of the two processes during productive HSV-1 infection. Based on a thorough analysis of the properties of an HSV-1 mutant virus that expresses forms of ICP0 that are unable to bind to USP7, we conclude that USP7-mediated stabilization of ICP0 is dominant over ICP0-induced degradation of USP7 during productive HSV-1 infection. We propose that the biological significance of the ICP0-USP7 interaction may be most pronounced in natural infection situations, in which limited amounts of ICP0 are expressed.