AbstractISG15 is an interferon-stimulated, ubiquitin-like protein that can conjugate to substrate proteins (ISGylation) to counteract microbial infection, but the underlying mechanisms remain elusive. Here, we use a virus-like particle trapping technology to identify ISG15-binding proteins and discover Ring Finger Protein 213 (RNF213) as an ISG15 interactor and cellular sensor of ISGylated proteins. RNF213 is a poorly characterized, interferon-induced megaprotein that is frequently mutated in Moyamoya disease, a rare cerebrovascular disorder. We report that interferon induces ISGylation and oligomerization of RNF213 on lipid droplets, where it acts as a sensor for ISGylated proteins. We show that RNF213 has broad antimicrobial activity in vitro and in vivo, counteracting infection with Listeria monocytogenes, herpes simplex virus 1, human respiratory syncytial virus and coxsackievirus B3, and we observe a striking co-localization of RNF213 with intracellular bacteria. Together, our findings provide molecular insights into the ISGylation pathway and reveal RNF213 as a key antimicrobial effector.