ISG15, an interferon-upregulated ubiquitin-like protein, is covalently conjugated to various cellular proteins (ISGylation). In this study, we found that protein phosphatase 2Cbeta (PP2Cbeta), which functions in the nuclear factor kappaB (NF-kappaB) pathway via dephosphorylation of TGF-beta-activated kinase, was ISGylated, and analysis by NF-kappaB luciferase reporter assay revealed that PP2Cbeta activity was suppressed by co-expression of ISG15, UBE1L, and UbcH8. We determined the ISGylation sites of PP2Cbeta and constructed its ISGylation-resistant mutant. In contrast to the wild type, this mutant suppressed the NF-kappaB pathway even in the presence of ISG15, UBE1L, and UbcH8. Thus, we propose that ISGylation negatively regulates PP2Cbeta activity.