Numerous mutations in E3 ubiquitin ligase parkin were shown to associate with familial Parkinson's disease. Here we show that parkin binds arrestins, versatile regulators of cell signaling. Arrestin-parkin interaction was demonstrated by coimmuno-precipitation of endogenous proteins from brain tissue, and shown to be direct using purified proteins. Parkin binding enhances arrestin interactions with another E3 ubiquitin ligase, Mdm2, apparently by shifting arrestin conformational equilibrium to the basal state preferred by Mdm2. Although Mdm2 was reported to ubiquitinate arrestins, parkin-dependent increase in Mdm2 binding dramatically reduces the ubiquitination of both non-visual arrestins, basal and stimulated by receptor activation, without affecting receptor internalization. Several disease-associated parkin mutations differentially affect the stimulation of Mdm2 binding. All parkin mutants tested effectively suppress arrestin ubiquitination, suggesting that bound parkin shields arrestin lysines targeted by Mdm2. Parkin binding to arrestins along with its effects on arrestin interaction with Mdm2 and ubiquitination is a novel function of this protein with implications for Parkinson's disease pathology.