The ubiquitin ligase Hul5 was recently identified as a component of the proteasome, a multisubunit protease that degrades ubiquitin-protein conjugates. We report here a proteasome-dependent conjugating activity of Hul5 that endows proteasomes with the capacity to extend ubiquitin chains. hul5 mutants show reduced degradation of multiple proteasome substrates in vivo, suggesting that the polyubiquitin signal that targets substrates to the proteasome can be productively amplified at the proteasome. However, the products of Hul5 conjugation are subject to disassembly by a proteasome-bound deubiquitinating enzyme, Ubp6. A hul5 null mutation suppresses a ubp6 null mutation, suggesting that a balance of chain-extending and chain-trimming activities is required for proper proteasome function. As the association of Hul5 with proteasomes was found to be strongly stabilized by Ubp6, these enzymes may be situated in proximity to one another. We propose that through dynamic remodeling of ubiquitin chains, proteasomes actively regulate substrate commitment to degradation.