Hydrolase that can remove conjugated ubiquitin from proteins and participates in endoplasmic reticulum-associated degradation (ERAD) for misfolded lumenal proteins. May act by triming the ubiquitin chain on the associated substrate to facilitate their threading through the VCP/p97 pore. Ubiquitin moieties on substrates may present a steric impediment to the threading process when the substrate is transferred to the VCP pore and threaded through VCP's axial channel. Mediates deubiquitination of 'Lys-27'-, 'Lys-29'- and 'Lys-33'-linked polyubiquitin chains. Also able to hydrolyze 'Lys-11'-linked ubiquitin chains. Cleaves both polyubiquitin and di-ubiquitin. May play a role in macroautophagy, regulating for instance the clearance of damaged lysosomes. May recruit PLAA, UBXN6 and VCP to damaged lysosome membranes decorated with K48-linked ubiquitin chains and remove these chains allowing autophagosome formation (PubMed:27753622). {ECO:0000269|PubMed:19818707, ECO:0000269|PubMed:23827681, ECO:0000269|PubMed:27753622}. This is the function of YOD1 (YOD1 deubiquitinase, ENSG00000180667).