Temporal control of p27Kip1 (p27) degradation imposes periodicity in its activity during cell cycle progression and its accumulation during cell cycle exit. Degradation of p27 is initiated by phosphorylation of p27 at Thr-187, which marks the protein for ubiquitination by SCFSkp2 and subsequent proteolysis by the 26S proteasome. Here we show that the p27 ubiquitination activity in cell extracts depends on the presence of the ubiquitin-like protein Nedd8 and enzymes that catalyze Nedd8 conjugation to proteins. Moreover, we show that reconstitution of the p27 ubiquitination activity of recombinant SCFSkp2 also requires Nedd8 conjugation pathway components. Inactivation of the Nedd8 conjugation pathway by a dominant negative mutant of the Nedd8-conjugating enzyme Nce1/Ubc12 blocks the ubiquitination and degradation of p27 in cell extracts. Consistent with a role in cell-cycle progression, Nedd8 is expressed in proliferating cells and is itself down-regulated upon cellular differentiation. These results suggest that the Nedd8 conjugation pathway may regulate the turnover of p27Kip1, independently of p27 phosphorylation, and further establishes the identity of protein components involved in p27 ubiquitination. Finally, these findings provide a direct demonstration of a function for Nedd8 in a biological process.