Ebola virus budding is mediated by two proline-rich motifs, PPxY and PTAP, within the viral matrix protein VP40. We have previously shown that a Nedd4-like protein BUL1, but not Nedd4, positively regulates budding of type D retrovirus Mason-Pfizer monkey virus (J. Yasuda, E. Hunter, M. Nakao, and H. Shida, EMBO Rep. 3:636-640, 2002). Here, we report that the cellular E3 ubiquitin ligase Nedd4 regulates budding of VP40-induced virus-like particles (VLPs) through interaction with the PPxY motif. Mutation of the active site cysteine (C894A), resulting in abrogation of ubiquitin ligase activity, impaired the function of Nedd4 on budding. In addition, the WW domains of Nedd4 are essential for binding to the viral PPxY motif, and a small fragment of Nedd4 containing only WW domains significantly inhibited Ebola VLP budding in a dominant-negative manner. Our findings suggest that the viruses containing PPxY as an L-domain motif specifically use E3 in the process of virus budding. We also examined the effects of overexpression of Tsg101 and its mutant. As expected, Tsg101 enhanced VP40-induced VLP release, and TsgDeltaC, which lacks its C-terminal half, inhibited VLP release. These results indicate that Nedd4, together with Tsg101, plays an important role in Ebola virus budding.