De-ubiquitinating enzymes (DUBs) can reverse the modifications catalyzed by ubiquitin ligases and as such are believed to be important regulators of a variety of cellular processes. Several members of this protein family have been associated with human cancers; however, there is little evidence for a direct link between deregulated de-ubiquitination and neoplastic transformation. Ubiquitin C-terminal hydrolase (UCH)-L1 is a DUB of unknown function that is overexpressed in several human cancers, but whether it has oncogenic properties has not been established. To address this issue, we generated mice that overexpress UCH-L1 under the control of a ubiquitous promoter. Here, we show that UCH-L1 transgenic mice are prone to malignancy, primarily lymphomas and lung tumors. Furthermore, UCH-L1 overexpression strongly accelerated lymphomagenesis in Emu-myc transgenic mice. Aberrantly expressed UCH-L1 boosts signaling through the Akt pathway by downregulating the antagonistic phosphatase PHLPP1, an event that requires its de-ubiquitinase activity. These data provide the first in vivo evidence for DUB-driven oncogenesis and suggest that UCH-L1 hyperactivity deregulates normal Akt signaling.