Deubiquitinase which hydrolyzes the isopeptide bond between the ubiquitin C-terminus and the lysine epsilon-amino group of the target protein (PubMed:23827681, PubMed:25944111, PubMed:29395066). May negatively regulate inflammatory and pathogen recognition signaling in innate immune response. Upon phosphorylation at Ser-202 and Ser-204 residues, via IL-1 receptor and Toll-like receptor signaling pathway, specifically deubiquitinates 'Lys-63'-polyubiquitinated MYD88 adapter protein triggering down-regulation of NF-kappa-B-dependent transcription of inflammatory mediators (PubMed:29395066). Independently of the catalytic activity, acts as a scaffold for alternative deubiquitinases to assemble specific deubiquitinase- substrate complexes. Associates with USP7 and USP9X deubiquitinases to stabilize alkylation repair enzyme ALKBH3, thereby promoting the repair of alkylated DNA lesions (PubMed:25944111). {ECO:0000269|PubMed:23827681, ECO:0000269|PubMed:25944111, ECO:0000269|PubMed:29395066}. This is the function of ENSG00000164164 (OTUD4, OTU deubiquitinase 4).