ABSTRACT The ESCRT-III protein complex executes reverse-topology membrane scission. The scission mechanism is unclear but is linked to remodeling of ESCRT-III complexes at the membrane surface. At endosomes, ESCRT-III mediates the budding of intralumenal vesicles (ILVs). In Saccharomyces cerevisiae, ESCRT-III activity at endosomes is regulated through an unknown mechanism by Doa4, an ubiquitin hydrolase that deubiquitylates transmembrane proteins sorted into ILVs. We report that the non-catalytic N-terminus of Doa4 binds Snf7, the predominant ESCRT-III subunit. Through this interaction, Doa4 overexpression alters Snf7 assembly status and inhibits ILV membrane scission. In vitro, the Doa4 N-terminus inhibits association of Snf7 with Vps2, which functions with Vps24 to arrest Snf7 polymerization and remodel Snf7 polymer structure. In vivo, Doa4 overexpression inhibits Snf7 interaction with Vps2 and also with the ATPase Vps4, which is recruited by Vps2 and Vps24 to remodel ESCRT-III complexes by catalyzing subunit turnover. Our data suggest a mechanism by which the deubiquitylation machinery regulates ILV biogenesis by interfering with ESCRT-III remodeling.