TFEB is a master regulator for transcription of genes involved in autophagy and lysosome biogenesis. Activity of TFEB is inhibited upon its serine phosphorylation by mTOR. The overall mechanisms by which TFEB activity in the cell is regulated are not well elucidated. Specifically, the mechanisms of TFEB turnover and how they might influence its activity remain unknown. Here, we show that STUB1, a chaperone‐dependent E3 ubiquitin ligase, modulates TFEB activity by preferentially targeting inactive phosphorylated TFEB for degradation by the ubiquitin–proteasome pathway. Phosphorylated TFEB accumulated in STUB1‐deficient cells and in tissues of STUB1‐deficient mice resulting in reduced TFEB activity. Conversely, cellular overexpression of STUB1 resulted in reduced phosphorylated TFEB and increased TFEB activity. STUB1 preferentially interacted with and ubiqutinated phosphorylated TFEB, targeting it to proteasomal degradation. Consistent with reduced TFEB activity, accumulation of phosphorylated TFEB in STUB1‐deficient cells resulted in reduced autophagy and reduced mitochondrial biogenesis. These studies reveal that the ubiquitin–proteasome pathway participates in regulating autophagy and lysosomal functions by regulating the activity of TFEB.