Members of the Pellino family are interleukin-1 receptor-associated kinase (IRAK)-interacting proteins that possess RING-like domains. The presence of these domains led to the suggestion that Pellino proteins are ubiquitin-protein isopeptide ligases (E3). However, no conclusive data currently exist to prove this proposal. This study provides the first direct evidence that Pellino proteins possess E3 activity. Recombinant forms of Pellino1 and Pellino2 and both spliced variants of Pellino3 are shown in an in vitro ubiquitination assay to be E3 ligases that catalyze Lys(63)-linked polyubiquitination, with Pellino3 exhibiting the greatest ligase activity. Whereas the Pellino proteins cause polyubiquitination of IRAK-1, we also show that kinase-active members of the IRAK family (IRAK-1 and IRAK-4) promote reciprocal polyubiquitination of the Pellino proteins and that this is associated with IRAK-induced degradation of the Pellino family. In contrast, IRAK-2 (which lacks a functional kinase domain) and kinase-dead forms of IRAK-1 and IRAK-4 fail to degrade the Pellino proteins. We show that these kinase-inactive IRAK proteins can associate with Pellino proteins, thus excluding the possibility that their inability to regulate Pellino degradation is due to lack of association with the Pellino proteins. The physiological relevance of IRAK-induced degradation of Pellino proteins is confirmed by the demonstration that lipopolysaccharide causes degradation of endogenous forms of Pellino3 in peripheral blood mononuclear cells. In summary, this study not only demonstrates Pellino proteins to be E3 ligases that can catalyze Lys(63)-linked polyubiquitination but also shows bidirectional signaling between the IRAK and Pellino families and highlights a novel function for IRAK kinase activity.