The ability of metazoans to combat pathogenic infection involves both systemic and local responses to the invading pathogens. Ubiquitin and SUMO pathways molecularly regulate the response to infection, immune signaling and gene expression. Here, we report that Degringolade (Dgrn, CG10981), a SUMO-targeted ubiquitin ligase connecting the two pathways, is essential for the innate immunity response in Drosophila. dgrnDK null and heterozygous mutant adult flies are severely immune-compromised and succumb rapidly to both pathogenic bacteria and fungi infections. The sensitivity to infection stems from the inability to produce multiple anti-microbial peptides, and transcriptional analyses suggest that the overexpression of Dgrn enhances the transcriptional output of the NF-kappaB related Toll and immune deficiency (IMD)-pathways. Moreover, expression of Dgrn alleviated the inhibitory impact of the cytoplasmic NF-kappaB inhibitor Cactus and the nuclear co-repressor Groucho/TLE (Gro). Additionally, we found that Dgrn is required for the local regenerative response of the mid-gut following infection. Upon oral infection, dgrn mutant flies fail to activate the Delta-Notch pathway in stem cells and enteroblasts, and are unable to regenerate and replace the damaged and dying enterocytes. Interestingly, the ubiquitin-specific protease CG8334 (dUSP32/dUSP11) antagonizes Dgrn activity in the gut, and halving the dose of CG8334 restores Delta-Notch signaling and rescues the lethality observed in dgrn mutants. Collectively, our data suggest that Dgrn is essential for both systemic and local tissue response to infection.