Type I interferon (IFN) signalling induces the expression of several hundred IFN-stimulated genes that provide an unfavourable environment for viral replication. To prevent an overexuberant response and autoinflammatory disease, IFN signalling requires tight control. One critical regulator is the ubiquitin-like protein ISG15, evidenced by autoinflammatory disease in patients with inherited ISG15 deficiencies. Current models suggest that ISG15 stabilises USP18, a well-established negative regulator of IFN signalling. USP18 also functions as an ISG15-specific peptidase, however its catalytic activity is dispensable for controlling IFN signalling. Here, we show that the ISG15-dependent stabilisation of USP18 is necessary but not sufficient for regulation of IFN signalling and that USP18 requires non-covalent interactions with ISG15 to enhance its regulatory function. Intriguingly, this trait has been acquired through co-option of a binding mechanism normally reserved for deISGylation, identifying an unexpected new function for ISG15.<br/
