Deubiquitinating enzyme that participates in a wide range of cellular processes by specifically cleaving isopeptide bonds between ubiquitin and substrate proteins or ubiquitin itself. Affects thereby important cellular signaling pathways such as NF-kappa-B, Wnt/beta- catenin, and cytokine production by regulating ubiquitin-dependent protein degradation. Participates in the activation of the Wnt signaling pathway by promoting FOXM1 deubiquitination and stabilization that induces the recruitment of beta-catenin to Wnt target gene promoter (PubMed:26912724). Regulates the assembly and disassembly of heat-induced stress granules by mediating the hydrolysis of unanchored ubiquitin chains (PubMed:29567855). Promotes lipopolysaccharide-induced apoptosis and inflammatory response by stabilizing the TXNIP protein (PubMed:37534934). Affects T-cell biology by stabilizing the inhibitory receptor on T-cells PDC1 (PubMed:37208329). Acts as a negative regulator of autophagy by regulating ULK1 at both protein and mRNA levels (PubMed:37607937). Acts also as a negative regulator of type I interferon production by simultaneously removing both 'Lys-48'-linked unanchored and 'Lys-63'-linked anchored polyubiquitin chains on the transcription factor IRF3 (PubMed:39761299). Modulates the stability of DNA mismatch repair protein MLH1 and counteracts the effect of the ubiquitin ligase UBR4 (PubMed:39032648). Upon activation by insulin, it gets phosphorylated through mTORC1-mediated phosphorylation to enhance YTHDF1 stability by removing 'Lys-11'-linked polyubiquitination (PubMed:39900921). May also deubiquitinate other substrates such as the calcium channel CACNA1H (By similarity). {ECO:0000250|UniProtKB:P56399, ECO:0000269|PubMed:19098288, ECO:0000269|PubMed:26912724, ECO:0000269|PubMed:29567855, ECO:0000269|PubMed:37208329, ECO:0000269|PubMed:37534934, ECO:0000269|PubMed:39032648, ECO:0000269|PubMed:39761299, ECO:0000269|PubMed:39900921}. This is the function of Ensembl gene identifier ENSG00000111667 (USP5, ubiquitin specific peptidase 5).