The chaperone-related, ubiquitin-selective AAA (ATPase associated with a variety of cellular activities) protein Cdc48 (also known as TER94, p97 and VCP) is a key regulator of intracellular proteolysis in eukaryotes. It uses the energy derived from ATP hydrolysis to segregate ubiquitylated proteins from stable assemblies with proteins, membranes and chromatin. Originally characterized as essential factor in proteasomal degradation pathways, Cdc48 was recently found to control lysosomal protein degradation as well. Moreover, impaired lysosomal proteolysis due to mutational inactivation of Cdc48 causes protein aggregation diseases in humans. This review introduces the major systems of intracellular proteolysis in eukaryotes and the role of protein ubiquitylation. It then discusses in detail structure, mechanism and cellular functions of Cdc48 with an emphasis on protein degradation pathways in yeast.