Conjugation to the small eukaryotic protein ubiquitin can functionally modify or target proteins for degradation by the proteasome. Removal of the ubiquitin modification, or deubiquitination, is performed by ubiquitin-specific proteases and is an important mechanism regulating this pathway. Here we describe a novel human ubiquitin-specific protease, USP3, initially identified as a partial cDNA clone similar to one of two highly conserved sequence regions common to all ubiquitin-specific proteases. We have isolated a complete USP3 cDNA clone containing both of these conserved sequence regions. The USP3 gene appears to be single copy and maps to human chromosome 15q22.3. A USP3 probe detects two mRNA transcripts, one of which corresponds in length to the cDNA. Both are expressed at low levels in all tissues examined, with highest expression in pancreas. The USP3 protein is a functional ubiquitin-specific protease in vitro, and is able to inhibit ubiquitin-dependent degradation of both an N-end Rule substrate and abnormal endogenous proteins in yeast. USP3 is also only the second known ubiquitin-specific protease capable of efficiently cleaving a ubiquitin-proline bond.