ISG15 is a ubiquitin-like protein containing two ubiquitin homology domains and becomes conjugated to a variety of proteins when cells are treated with type I interferon or lipopolysaccharide. Although ISG15 shares several common properties with those of other ubiquitin-like molecules, it is a unique member, whose expression and conjugation to target proteins are tightly regulated by specific signaling pathways, indicating it may be associated with specialized functions in innate immune system. Loss of UBP43 (USP18), a protease that specifically removes ISG15 from ISG15-modified proteins, in mice leads to decreased life span, brain cell injury, and hypersensitivity to interferon stimulation. In UBP43 deficient cells, interferon induces a prolonged Stat1 tyrosine phosphorylation and DNA binding, which result in a prolonged and enhanced activation of interferon-stimulated genes. (C) 2003 Elsevier Inc. All rights reserved.