The Nedd8 conjugation pathway is conserved from yeast to humans and is essential in many organisms. Nedd8 is conjugated to cullin proteins in a process that alters SCF E3 ubiquitin ligase activity, and it is presumed that Nedd8 deconjugation would reverse these effects. We now report the X-ray structures of the human Nedd8-specific protease, Den1, in a complex with the inhibitor Nedd8 aldehyde, thus revealing a model for the tetrahedral transition state intermediate generated during proteolysis. Although Den1 is closely related to the SUMO-specific protease family (Ulp/Senp family), structural analysis of the interface suggests determinants involved in Nedd8 selectivity by Den1 over other ubiquitin-like family members and suggests how the Ulp/Senp architecture has been modified to interact with different ubiquitin-like modifiers.