Ubiquitin carboxyl-terminal hydrolase (formerly known as ubiquitin carboxyl-terminal esterase), from rabbit reticulocytes, has been shown to hydrolyze thiol esters formed between the ubiquitin carboxyl terminus and small thiols (e.g. glutathione), as well as free ubiquitin adenylate (Rose, I. A., and Warms, J. V. B. (1983) Biochemistry 22, 4234-4237). We now show that this enzyme hydrolyzes amide derivatives of the ubiquitin carboxyl terminus, including those of lysine (epsilon-amino), glycine methyl ester, and spermidine. It also hydrolyzes ubiquitin COOH-terminal hydroxamic acid, but is inactivated under the conditions for assaying ubiquitin-hydroxylamine adduct hydrolysis. Amide adducts formed between ubiquitin and epsilon-amino groups of protein lysine residues are much poorer substrates than is the ubiquitin amide of the epsilon-amino group of free lysine. The enzyme is thus a general hydrolase that recognizes the ubiquitin moiety, but is highly selective for small ubiquitin derivatives. It probably functions to regenerate ubiquitin from adventitiously formed ubiquitin amides and thiol esters. It also has the correct specificity to function in regenerating ubiquitin from small ubiquitin peptides that are probable end products of ubiquitin-dependent proteolysis. A simple, large-scale preparation of the enzyme from human erythrocytes is described.