The COP9 signalosome (CSN) is a conserved protein complex with homologies to the lid subcomplex of the 26S proteasome. It promotes cleavage of the Nedd8 conjugate (deneddylation) from the cullin component of SCF ubiquitin ligases. We provide evidence that cullin neddylation and deneddylation is highly dynamic, that its equilibrium can be effectively modulated by CSN, and that neddylation allows Cul1 to form larger protein complexes. CSN2 integrates into the CSN complex via its C-terminal region and its N-terminal half region is necessary for direct interaction with Cul1. The polyclonal antibodies against CSN2 but not other CSN subunits cause accumulation of neddylated Cul1/Cul2 in HeLa cell extract, indicating that CSN2 is essential in cullin deneddylation. Further, CSN inhibits ubiquitination and degradation of the cyclin-dependent kinase inhibitor p27(kip1) in vitro. Microinjection of the CSN complex impeded the G1 cells from entering the S phase. Moreover, anti-CSN2 antibodies negate the CSN-dependent p27 stabilization and the G1/S blockage, suggesting that these functions require the deneddylation activity. We conclude that CSN inhibits SCF ubiquitin ligase activity in targeting p27 proteolysis and negatively regulates cell cycle at the G1 phase by promoting deneddylation of Cul1.