ABSTRACT Interferon stimulated gene 15 (ISG15) is an ubiquitin-like protein whose expression and conjugation to targets (ISGylation) is induced by infection, interferon (IFN)-α and -β, ischemia, DNA damage and aging. Attention has historically focused on the antiviral effects of ISGylation, which blocks the entry, replication or release of different intracellular pathogens. However, recently, new functions of ISGylation have emerged that implicate it in multiple cellular processes, such as DNA repair, autophagy, protein translation and exosome secretion. In this Review, we discuss the induction and conjugation of ISG15, as well as the functions of ISGylation in the prevention of infections and in cancer progression. We also offer a novel perspective with regard to the latest findings on this pathway, with special attention to the role of ISGylation in the inhibition of exosome secretion, which is mediated by fusion of multivesicular bodies with lysosomes. Finally, we propose that under conditions of stress or infection, ISGylation acts as a defense mechanism to inhibit normal protein translation by modifying protein kinase R (PKR, also known as EIF2AK2), while any newly synthesized proteins are being tagged and thus marked as potentially dangerous. Then, the endosomal system is re-directed towards protein degradation at the lysosome, to effectively ‘lock’ the cell gates and thus prevent the spread of pathogens, prions and deleterious aggregates through exosomes.