Ovarian tumour domain-containing protein 3 (OTUD3), a key OTU (ovarian tumour protease) family deubiquitylase, plays context-dependent roles in cancers. It suppresses tumorigenesis in breast, colon, liver and cervical cancer through stabilizing PTEN (phosphatase and tension homologue deleted on chromosome 10) while promotes lung tumorigenesis through stabilizing GRP78 (The glucose-regulated protein 78 kDa). The regulation especially post-translational modification of OTUD3 remains unclear. Here, we report that the carboxyl terminus of Hsc70-interacting protein (CHIP) is a ubiquitin ligase for OTUD3. CHIP interacts with, polyubiquitylates OTUD3 and promotes OTUD3 degradation. Knockdown of CHIP stabilizes OTUD3 which leads to elevated GRP78 levels in lung cancer cells. CHIP-knockdown lung cancer cells exhibit increased invasion in OTUD3 and GRP78 dependent manner. Further study demonstrates that CHIP-knockdown lung cancer cells are more prone to metastasize to mice lung when injected intravenously or subcutaneously. Moreover, the expression of CHIP is low in human lung cancer tissues and inversely correlates with OTUD3 expression and GRP78 expression. Furthermore, we identified CHIP mutations in human lung cancers, which reduce CHIP catalytic activity. These findings demonstrate that CHIP is a negative regulator of OTUD3 and CHIP suppresses lung cancer metastasis through inhibiting OTUD3-GRP78 signaling axis.