Interferon-induced ISG15-specific protease that plays a crucial role for maintaining a proper balance of ISG15-conjugated proteins in cells (PubMed:11788588). Regulates protein ISGylation by efficiently cleaving ISG15 conjugates linked via isopeptide bonds. Regulates T-cell activation and T-helper 17 (Th17) cell differentiation by deubiquitinating TAK1, likely to keep TAK1-TAB complexes in steady conditions (PubMed:23825189). In turn, restricts activation of NF- kappa-B, NFAT, and JNK as well as expression of IL2 in T-cells after TCR activation (PubMed:23825189). Acts as a molecular adapter with USP20 to promote innate antiviral response through deubiquitinating STING1 (PubMed:27801882). Involved also in the negative regulation of the inflammatory response triggered by type I interferon (PubMed:27325888, PubMed:28165510). Upon recruitment by STAT2 to the type I interferon receptor subunit IFNAR2 interferes with the assembly of the ternary interferon-IFNAR1-IFNAR2 complex and acts as a negative regulator of the type I interferon signaling pathway (PubMed:28165510). {ECO:0000269|PubMed:11788588, ECO:0000269|PubMed:23825189, ECO:0000269|PubMed:27325888, ECO:0000269|PubMed:27801882, ECO:0000269|PubMed:28165510}. [Isoform 2]: Has enzymatic activity similar to isoform 1 and interferes with type I interferon signaling. Major deISGylation enzyme for nuclear proteins (PubMed:22170061). . This is the function of USP18 (ubiquitin specific peptidase 18, ENSG00000184979).