Integration and down-regulation of cell growth and differentiation signals rely on plasma membrane receptor endocytosis and sorting towards either recycling vesicles or degradative lysosomes via multivesicular bodies (MVB). In this process, the endosomal sorting complex-III required for transport (ESCRT-III) controls membrane deformation and scission triggering intraluminal vesicle (ILV) formation at early endosomes. Here, we show that the ESCRT-III member CHMP1B can be ubiquitinated within a flexible loop known to undergo conformational changes during polymerization. We demonstrate further that CHMP1B is deubiquitinated by the ubiquitin specific protease USP8 (syn. UBPY) and found fully devoid of ubiquitin in a ~500 kDa large complex that also contains its ESCRT-III partner IST1. Moreover, EGF stimulation induces the rapid and transient accumulation of ubiquitinated forms of CHMP1B on cell membranes. Accordingly, CHMP1B ubiquitination is necessary for CHMP1B function in both EGF receptor trafficking in human cells and wing development in Drosophila. Based on these observations, we propose that CHMP1B is dynamically regulated by ubiquitination in response to EGF and that USP8 triggers CHMP1B deubiquitination possibly favoring its subsequent assembly into a membrane-associated ESCRT-III polymer.