Ubiquitylation, a widespread and important posttranslational modification of eukaryotic proteins, regulates a multitude of critical cellular processes, both in normal and pathological conditions. A classical view of how ubiquitylation regulates protein function involves recognition of ubiquitin-encoded signals by specific ubiquitin-binding domains. However, evidence suggests the existence of direct effects of ubiquitylation, which occur through its impact on protein-protein interactions that do not involve specific ubiquitin receptors. Ubiquitin attachment may cause steric limitations that influence interaction of the modified protein with other proteins. Here, we present examples of this direct effect of ubiquitylation and propose how a two-level ubiquitin-mediated regulatory mechanism may provide flexibility.