Insulin-degrading enzyme (IDE) is a metalloprotease implicated in insulin degradation and suggested to have a variety of additional functions, including the clearance of amyloid beta peptides of Alzheimer's disease. Little is known about endogenous proteins that may interact with and modulate IDE's activity in the cell. We purified and characterized two proteins from mouse leukemic splenocytes that interact with IDE and inhibit its insulin-degrading activity. A protein of 14 kDa was similar to a competitive IDE inhibitor reported previously. The major inhibitor was identified by amino acid sequencing as ubiquitin, a protein that is post-translationally covalently attached to other intracellular proteins and regulates diverse cellular processes. Ubiquitin inhibited insulin-degrading activity of IDE and diminished crosslinking of 125I-insulin to IDE in a specific, concentration-dependent, reversible, and ATP-independent manner. Ubiquitin did not affect the crosslinking of 125I-insulin to insulin receptors or of 125I-atrial natriuretic peptide (ANP) to its receptor guanylate cyclase-A. These findings suggest a novel role for ubiquitin or perhaps proteins with ubiquitin-like domains in regulating the function of IDE.