FOXO family transcription factors are downstream effectors of Insulin/IGF-1 signaling (IIS) and major determinants of aging in organisms ranging from worms to man. The molecular mechanisms that actively promote DAF16/FOXO stability and function are unknown. Here we identify the deubiquitylating enzyme MATH-33 as an essential DAF-16 regulator in IIS, which stabilizes active DAF-16 protein levels and, as a consequence, influences DAF-16 functions, such as metabolism, stress response, and longevity in C. elegans. MATH-33 associates with DAF-16 in cellulo and in vitro. MATH-33 functions as a deubiquitylase by actively removing ubiquitin moieties from DAF-16, thus counteracting the action of the RLE-1 E3-ubiquitin ligase. Our findings support a model in which MATH-33 promotes DAF-16 stability in response to decreased IIS by directly modulating its ubiquitylation state, suggesting that regulated oscillations in the stability of DAF-16 protein play an integral role in controlling processes such as metabolism and longevity.