Deubiquitinating enzymes (DUBs) control the ubiquitination status of proteins in various cellular pathways. Regulation of the activity of DUBs, which is critically important to cellular homoeostasis, can be achieved at the level of gene expression, protein complex formation, or degradation. Here, we report that ubiquitination also directly regulates the activity of a DUB, ataxin-3, a polyglutamine disease protein implicated in protein quality control pathways. Ubiquitination enhances ubiquitin (Ub) chain cleavage by ataxin-3, but does not alter its preference for K63-linked Ub chains. In cells, ubiquitination of endogenous ataxin-3 increases when the proteasome is inhibited, when excess Ub is present, or when the unfolded protein response is induced, suggesting that the cellular functions of ataxin-3 in protein quality control are modulated through ubiquitination. Ataxin-3 is the first reported DUB in which ubiquitination directly regulates catalytic activity. We propose a new function for protein ubiquitination in regulating the activity of certain DUBs and perhaps other enzymes.