The generation and characterization of ubiquitin (Ub)-aldehyde, a potent inhibitor of Ub-C-terminal hydrolase, has previously been reported. We now examine the action of this compound on the Ub-mediated proteolytic pathway using the system derived from rabbit reticulocytes. Addition of Ub-aldehyde was found to strongly inhibit breakdown of added 125I-labeled lysozyme, but inhibition was overcome by increasing concentrations of Ub. The following evidence shows the effect of Ub-aldehyde on protein breakdown to be indirectly caused by its interference with the recycling of Ub, leading to exhaustion of the supply of free Ub: Ub-aldehyde markedly increased the accumulation of Ub-protein conjugates coincident with a much decreased rate of conjugate breakdown. release of Ub from isolated Ub-protein conjugates in the absence of ATP (and therefore not coupled to protein degradation) is markedly inhibited by Ub-aldehyde. On the other hand, the ATP-dependent degradation of the protein moiety of Ub conjugates, which is an integral part of the proteolytic process, is not inhibited by this agent. Direct measurement of levels of free Ub showed a rapid disappearance caused by the inhibitor. The Ub is found to be distributed in derivatives of a wide range of molecular weight classes. It thus seems that Ub-aldehyde, previously demonstrated to inhibit the hydrolysis of Ub conjugates of small molecules, also inhibits the activity of a series of enzymes that regenerate free Ub from adducts with proteins and intermediates in protein breakdown.