Although neuronal-precursor-cell-expressed developmentally downregulated protein-8 (NEDD8) and ubiquitin share the highest level of sequence identity and structural similarity among several known ubiquitin-like proteins, their conjugation to a protein leads to distinct biological consequences. In the study, we first identified the NEDD8 protein of Chlamydomonas reinhardtii (CrNEDD8) and discovered that CrNEDD8 is fused at the C-terminus of a ubiquitin moiety (CrUb) in a head-to-tail arrangement. This CrUb-CrNEDD8 protein was termed CrRUB1 (related to ubiquitin 1) by analogy with a similar protein in Arabidopsis thaliana (AtRUB1). Since there is high sequence identity in comparison to the corresponding human proteins (97% for ubiquitin and 84% for NEDD8), a His-CrRUB1-glutathione S-transferase (GST) fusion construct was adopted as the alternative substrate to characterize the specificity of NEDD8-specific peptidase SENP8 for CrNEDD8. The data showed that SENP8 only cleaved the peptide bond beyond the di-glycine motif of CrNEDD8 and His-RUB1 was subsequently generated, confirming that SENP8 has exquisite specificity for CrNEDD8 but not CrUb. To further determine the basis of this specificity, site-directed mutagenesis at earlier reported putative molecular determinants of NEDD8 specific recognition by SENP8 was performed. We found that a single N51E mutation of CrNEDD8 completely inhibited its hydrolysis by SENP8. Conversely, a single E51N mutation of CrUb enabled this ubiquitin mutant to undergo hydrolysis by SENP8, revealing that a single residue difference at the position 51 contributes substantially to the substrate selectivity of SENP8. Moreover, the E51N/R72A double mutant of the CrUb subdomain can further increase the efficiency of cleavage by SENP8, indicating that the residue at position 72 is also important in substrate recognition. The E51N or R72A mutation of CrUb also inhibited the hydrolysis of CrUb by ubiquitin-specific peptidase USP2. However, USP2 cannot cleave the N51E/A72R double mutant of the CrNEDD8 subdomain, suggesting that USP2 requires additional recognition sites.