Type I IFNs induce the expression of IFN-stimulated gene 15 (ISG15) and its conjugation to cellular targets. ISGylation is a multistep process involving IFN-inducible Ube1L, UbcH8, and a yet-to-be identified E3 ligase. Here we report the identification of an IFN-induced HECT-type E3 protein ligase, HERC5/Ceb1, which mediates ISGylation. We also defined a number of proteins modified by ISG15 after IFN triggering or HERC5 overexpression. A reduction in endogenous HERC5 by small interfering RNA inhibition blocks the IFN-induced ISG15 conjugation. Conversely, HERC5 coexpression with Ube1L and UbcH8 induces the ISG15 conjugation in vivo independent of IFN stimulation. A targeted substitution of Cys-994 to Ala in the HECT domain of HERC5 completely abrogates its E3 protein ligase activity. Therefore, this study demonstrates that HERC5/Ceb1 is involved in the conjugation of ISG15 to cellular proteins.