The ubiquitin-proteasome system (UPS) is highly complex and entails the concerted actions of many enzymes that function to ubiquitinate proteins targeted to the proteasome as well as enzymes that remove and recycle ubiquitin for additional rounds of proteolysis. Ubiquitin C-terminal hydrolase-L3 (UCH-L3) is a human cytosolic deubiquitinase whose precise biological function is not known. It is believed to hydrolyze small peptides or chemical adducts from the C-terminus of ubiquitin that may be remnant from proteasomal processing. In addition, UCH-L3 is a highly effective biotechnological tool that is used to produce small or unstable peptides/proteins recalcitrant to production in Escherichia coli expression systems. Previous research, which explored the substrate selectivity of UCH-L3, demonstrated a substrate size limitation for proteins/peptides expressed as α-linked C-terminal fusions to ubiquitin and also suggested that an additional substrate property may affect UCH-L3 hydrolysis [ Larsen , C. N. et al. (1998) Biochemistry 37 , 3358 - 3368 ]. Using a series of engineered protein substrates, which are similar in size yet differ in secondary structure, we demonstrate that thermal stability is a key factor that significantly affects UCH-L3 hydrolysis. In addition, we show that the thermal stabilities of the engineered substrates are not altered by fusion to ubiquitin and offer a possible mechanism as to how ubiquitin affects the structural and unfolding properties of natural in vivo targets.