Although many eukaryotic proteins are amino (N)-terminally acetylated, structural mechanisms by which N-terminal acetylation mediates protein interactions are largely unknown. Here, we found that N-terminal acetylation of the E2 enzyme, Ubc12, dictates distinctive E3-dependent ligation of the ubiquitin-like protein Nedd8 to Cul1. Structural, biochemical, biophysical, and genetic analyses revealed how complete burial of Ubc12's N-acetyl-methionine in a hydrophobic pocket in the E3, Dcn1, promotes cullin neddylation. The results suggest that the N-terminal acetyl both directs Ubc12's interactions with Dcn1 and prevents repulsion of a charged N terminus. Our data provide a link between acetylation and ubiquitin-like protein conjugation and define a mechanism for N-terminal acetylation-dependent recognition.