Ubiquitin proteases remove ubiquitin monomers or polymers to modify the stability or activity of proteins and thereby serve as key regulators of signal transduction. Here, we describe the function of the Drosophila ubiquitin-specific protease 36 (dUSP36) in negative regulation of the immune deficiency (IMD) pathway controlled by the IMD protein. Overexpression of catalytically active dUSP36 ubiquitin protease suppresses fly immunity against Gram-negative pathogens. Conversely, silencing dUsp36 provokes IMD-dependent constitutive activation of IMD-downstream Jun kinase and NF-kappaB signaling pathways but not of the Toll pathway. This deregulation is lost in axenic flies, indicating that dUSP36 prevents constitutive immune signal activation by commensal bacteria. dUSP36 interacts with IMD and prevents K63-polyubiquitinated IMD accumulation while promoting IMD degradation in vivo. Blocking the proteasome in dUsp36-expressing S2 cells increases K48-polyubiquitinated IMD and prevents its degradation. Our findings identify dUSP36 as a repressor whose IMD deubiquitination activity prevents nonspecific activation of innate immune signaling.