Ubiquitination of eukaryotic proteins regulates a broad range of cellular processes, including T cell activation and tolerance. We have previously demonstrated that GRAIL (gene related to anergy in lymphocytes), a transmembrane RING finger ubiquitin E3 ligase, initially described as induced during the induction of CD4 T cell anergy, is also expressed in resting CD4 T cells. In this study, we show that GRAIL can down-modulate the expression of CD83 (previously described as a cell surface marker for mature dendritic cells) on CD4 T cells. GRAIL-mediated down-modulation of CD83 is dependent on an intact GRAIL extracellular protease-associated domain and an enzymatically active cytosolic RING domain, and proceeds via the ubiquitin-dependent 26S proteosome pathway. Ubiquitin modification of lysine residues K168 and K183, but not K192, in the cytoplasmic domain of CD83 was shown to be necessary for GRAIL-mediated degradation of CD83. Reduced CD83 surface expression levels were seen both on anergized CD4 T cells and following GRAIL expression by retroviral transduction, whereas GRAIL knock-down by RNA interference in CD4 T cells resulted in elevated CD83 levels. Furthermore, CD83 expression on CD4 T cells contributes to T cell activation as a costimulatory molecule. This study supports the novel mechanism of ubiquitination by GRAIL, identifies CD83 as a substrate of GRAIL, and ascribes a role for CD83 in CD4 T cell activation.