The ubiquitin-proteasome pathway plays a critical role in the degradation of proteins involved in tumor growth and has therefore become a target for cancer therapy. In order to discover novel inhibitors of this pathway, a cellular assay reporter of proteasome activity was established. Human DLD-1 colon cancer cells were engineered to express a 4 ubiquitin-luciferase (DLD-1 4Ub-Luc) reporter protein, rapidly degraded via the ubiquitin-proteasome pathway and designed DLD-1 4Ub-Luc cells. Following treatment with reference proteasome inhibitors, the 4Ub-Luc protein accumulated in DLD-1 4Ub-Luc cells and a 80-fold increase in luciferase-produced bioluminescence signal was measured, as compared to untreated cells. The screening of over 30,000 compounds using this DLD-1 4Ub-Luc assay led to the identification of physalin B as a novel inhibitor of the ubiquitin-proteasome pathway. Indeed, physalin B induced an increase in bioluminescence from DLD-1 4Ub-Luc cells, at concentrations also producing an accumulation of ubiquitinated proteins and inhibiting TNFalpha-induced NF-kappaB activation. Physalin B did not inhibit catalytic activities of purified proteasome and interfered with cellular proteasomal catalytic activities at 4- to 8-fold higher concentrations than that required to induce significant increase in bioluminescence and accumulation of ubiquitinated proteins in DLD-1 4Ub-Luc cells. Furthermore, physalin B proved to be cytotoxic, triggered apoptosis in DLD-1 4Ub-Luc cells and induced the proapoptotic protein NOXA, characteristic of the proteasome signaling pathway. Therefore, the use of the DLD-1 4Ub-Luc assay allowed the identification of a novel inhibitor of the ubiquitin-proteasome pathway that might interfere with proteasome functions in a different way from reference proteasome inhibitors.