UHRF1 (Ubiquitin-like, with PHD and RING finger domains 1) plays an important role in DNA CpG methylation, heterochromatin function and gene expression. Overexpression of UHRF1 has been suggested to contribute to tumorigenesis. However, regulation of UHRF1 is largely unknown. Here we show that the deubiquitylase USP7 interacts with UHRF1. Using interaction-defective and catalytic mutants of USP7 for complementation experiments, we demonstrate that both physical interaction and catalytic activity of USP7 are necessary for UHRF1 ubiquitylation and stability regulation. Mass spectrometry analysis identified phosphorylation of serine (S) 652 within the USP7-interacting domain of UHRF1, which was further confirmed by a UHRF1 S652 phosphor (S652ph)-specific antibody. Importantly, the S652ph antibody identifies phosphorylated UHRF1 in mitotic cells and consistently S652 can be phosphorylated by the M phase-specific kinase CDK1-cyclin B in vitro. UHRF1 S652 phosphorylation significantly reduces UHRF1 interaction with USP7 in vitro and in vivo, which is correlated with a decreased UHRF1 stability in the M phase of the cell cycle. In contrast, UHRF1 carrying the S652A mutation, which renders UHRF1 resistant to phosphorylation at S652, is more stable. Importantly, cells carrying the S652A mutant grow more slowly suggesting that maintaining an appropriate level of UHRF1 is important for cell proliferation regulation. Taken together, our findings uncovered a cell cycle-specific signaling event that relieves UHRF1 from its interaction with USP7, thus exposing UHRF1 to proteasome-mediated degradation. These findings identify a molecular mechanism by which cellular UHRF1 level is regulated, which may impact cell proliferation.