The ubiquitin pathway has been implicated in the regulation of the abundance of proteins that control cell growth and proliferation. We have identified and characterized a novel human ubiquitin isopeptidase, UBPY, which both as a recombinant protein and upon immunoprecipitation from cell extracts is able to cleave linear or isopeptide‐linked ubiquitin chains. UBPY accumulates upon growth stimulation of starved human fibroblasts, and its levels decrease in response to growth arrest induced by cell–cell contact. Inhibition of UBPY accumulation by antisense plasmid microinjection prevents fibroblasts from entering S‐phase in response to serum stimulation. By increasing or decreasing the cellular abundance of UBPY or by overexpressing a catalytic site mutant, we detect substantial changes in the total pattern of protein ubiquitination, which correlate stringently with cell proliferation. Our results suggest that UBPY plays a role in regulating the overall function of the ubiquitin–proteasome pathway. Affecting the function of a specific UBP in vivo could provide novel tools for controlling mammalian cell proliferation.