The deubiquitinating enzyme UBPY, also known as USP8, regulates cargo sorting and membrane traffic at early endosomes. Here we demonstrate the regulatory mechanism of the UBPY catalytic activity. We identified 14-3-3 epsilon, gamma, and zeta as UBPY-binding proteins using co-immunoprecipitation followed by mass spectrometric analysis. The 14-3-3 binding of UBPY was inhibited by mutating the consensus 14-3-3-binding motif RSYS(680)SP, by phosphatase treatment, and by competition with the Ser(680)-phosphorylated RSYS(680)SP peptide. Metabolic labeling with [(32)P]orthophosphate and immunoblotting using antibody against the phosphorylated 14-3-3-binding motif showed that Ser(680) is a major phosphorylation site in UBPY. These results indicated that 14-3-3s bind to the region surrounding Ser(680) in a phosphorylation-dependent manner. The mutation at Ser(680) led to enhanced ubiquitin isopeptidase activity of UBPY toward poly-ubiquitin chains and a cellular substrate, epidermal growth factor receptor, in vitro and in vivo. Moreover, addition of 14-3-3epsilon inhibited the UBPY activity in vitro. Finally, UBPY was dephosphorylated at Ser(680) and dissociated from 14-3-3s in the M phase, resulting in enhanced activity of UBPY during cell division. We conclude that UBPY is catalytically inhibited in a phosphorylation-dependent manner by 14-3-3s during the interphase, and this regulation is cancelled in the M phase.