Protein modification by the interferon-stimulated gene 15 (ISG15), an ubiquitin-like modifier, affects multiple cellular functions and represents one of the major antiviral effector systems. Covalent linkage of ISG15 to proteins was previously reported to be counteracted by the protease USP18. So far analysis of the molecular properties of USP18 was hampered by low expression yields and impaired solubility. We established high yield expression of USP18 in insect cells and purified the protease to homogeneity. USP18 binds with high affinity to ISG15 as shown by microscale thermophoresis displaying a Kd of 1.3±0.2 μM. The catalytic properties of USP18 were characterized by a novel assay using ISG15 fused to a fluorophore via an isopeptide bond giving at pH 7.5 a Km of 4.6±0.2 μM and a kcat of 0.23±0.004 s(-1) , respectively. Furthermore, the recombinant enzyme cleaves efficiently ISG15 but not ubiquitin from endogenous cellular substrates. In line with these data USP18 exhibited neither cross reactivity with an ubiquitin isopeptide fluorophore substrate nor with a ubiquitin vinyl sulfone showing that the enzyme is specific for ISG15. This article is protected by copyright. All rights reserved.