Mammalian cells contain two distinct proteolytic pathways that are involved in different aspects of protein breakdown. Proteins that enter the cell from the extracellular milieu (such as receptor-mediated endocytosed proteins) are degraded in lysosomes. Lysosomal degradation of intracellular proteins occurs mostly under stressed conditions. Nonlysosomal mechanisms are responsible for the highly selective turnover of intracellular proteins that occurs under basal metabolic conditions, but also for some aspects of degradation of intracellular proteins under stress. An important nonlysosomal proteolytic pathway is the ubiquitin system in which proteins are degraded by a 26s protease complex following conjugation by multiple molecules of ubiquitin. The “catalytic core” of the complex is a 20s protease complex also known as the proteasome. Three recent papers, describing three apparently independent biological processes, highlight the role of the ubiquitin-proteasome system as a major, however selective, proteolytic and regulatory pathway. Using specific inhibitors to the proteasome, Rock et al.(1994) demonstrate a role for this protease in the degradation of the major bulk of cellular proteins, but also in specific processing and subsequent presentation of major histocompatibility complex (MHC) class l-restricted antigens. A previous study by the same researchers (Michalek et al., 1993) showed that antigen processing requires the ubiquitin-activating enzyme, El, the first enzyme in the ubiquitin pathway cascade. Thus, it appears that antigen processing is both ubiquitin dependent and proteasome dependent. Palombella et al.(1994) show that maturation of~ 105 NF-~ 6 precursor into the active~ 50 subunit of the transcriptional activator also proceeds in a ubiquitin-and proteasomedependent manner. Furthermore, inhibitors to the proteasome block degradation of h&a and thus prevent tumor necrosis factor a (TNFa)-induced activation of mature NF-KB and its entry into the nucleus. The two studies clearly demonstrate that the ubiquitin-proteasome system is involved not only in complete destruction of its protein substrates, but also in limited proteolysis and posttranslational processing in which biologically active peptides or fragments are generated. Treier et al.(1994) show that the unstable c-Jut% but not the stable v-Jun, is multiubiquitinated and degraded. The escape of the oncogenic v-Jun from ubiquitin-dependent degradation suggests a novel route to malignant transformation. Presented here is a review of the components, mechanisms of action, and cellular physiology of the ubiquitin-proteasome pathway.