Protein degradation by the 26S proteasome is a fundamental process involved in a broad range of cellular activities, yet how proteasome activity is regulated remains poorly understood. We report here that ubiquitin-like domain-containing C-terminal domain phosphatase 1 (UBLCP1) is a 26S proteasome phosphatase that regulates nuclear proteasome activity. UBLCP1 directly interacts with the proteasome via its UBL domain and is exclusively localized in the nucleus. UBLCP1 dephosphorylates the 26S proteasome and inhibits proteasome activity in vitro. Knockdown of UBLCP1 in cells promotes 26S proteasome assembly and selectively enhances nuclear proteasome activity. Our results describe the first identified proteasome-specific phosphatase and uncover a unique mechanism for phosphoregulation of the proteasome.