Several studies have examined the importance of ubiquitin-like posttranslational modifiers (which consist of an unexpectedly large family). Of these, NEDD8 (also called Rub1, related to ubiquitin 1) with a high homology to ubiquitin is covalently linked to all members of cullin (Cul)-family proteins through an enzymatic cascade analogous to ubiquitylation. Cul-family proteins are scaffold proteins for a wide series of ubiquitin-protein ligase complexes, such as SCFs (Skp1, Cul-1, Roc1, and F-box proteins), which regulate the degradation of broad range of cellular proteins. Unlike ubiquitin, which mostly acts as a degradation signal for the target proteins, NEDD8 acts as an activation signal for Cul-family proteins; i.e., Cul-based ubiquitin-protein ligases. Accordingly, the NEDD8 conjugation pathway regulating Cul-protein function is responsible for a diverse array of biologically important processes, such as the cell cycle progression, signalling cascades and developmental programs. Furthermore, recent studies have revealed that the COP9/Signalosome complex interacts physically and genetically with Cul-family proteins, and catalyzes deconjugation of NEDD8 ligated to Cul-family proteins. This review summarizes recent advances in biochemical and genetic studies on how the NEDD8-modifying system regulates Cul-family proteins and their physiology.