A growing number of important regulatory proteins within cells are modified by conjugation of ubiquitin, a well-conserved 76-amino-acid polypeptide. The ubiquitinated proteins are targeted to proteasome for degradation or alternative metabolic fates, such as triggering of plasma membrane endocytosis and trafficking to vacuoles or lysosomes. Deubiquitination, reversal of this modification, is being recognized as an important regulatory step. Deubiquitinating enzymes are cysteine proteases that specifically cleave off ubiquitin from ubiquitin-conjugated protein substrates as well as from its precursor proteins. Genome sequencing projects have identified more than 90 deubiquitinating enzymes, making them the largest family of enzymes in the ubiquitin system. This review will concentrate on recent important findings as well as new insights into the diversity and emerging roles of deubiquitinating enzymes in the ubiquitin-dependent pathway.