Conjugation of ubiquitin-like protein Nedd8 to cullin (i.e. neddylation) is essential for the function of cullin-RING ubiquitin ligases (CRLs). Here we show that neddylation stimulates recruitment of ubiquitin-conjugating enzyme (E2) esterified with ubiquitin (E2~Ub), helps bridge the ~50 Å gap between E2 and substrate bound to SCF to enable their reaction, and facilitates formation of amide bonds in E2's active site. Together, these effects potently stimulate transfer of ubiquitin to substrate. We propose that the initiator ubiquitin spans the gap, and the impact of neddylation on transfer of subsequent ubiquitins by the E2 Cdc34 arises from improved E2 recruitment and enhanced amide bond formation in the E2 active site. The combined effects of neddylation greatly enhance the probability that a substrate molecule acquires ≥4 ubiquitins in a single encounter with a CRL. The surprisingly diverse effects of Nedd8 conjugation underscore the complexity of CRL regulation and suggest that modification of other ubiquitin ligases with ubiquitin or ubiquitin-like proteins may likewise have major functional consequences.