The bacterial effector MavC modulates the host immune response by blocking Ube2N activity employing an E1-independent ubiquitin ligation, catalyzing formation of a γ-glutamyl-ε-Lys (Gln40Ub-Lys92Ube2N) isopeptide crosslink using a transglutaminase mechanism. Here we provide biochemical evidence in support of MavC targeting the activated, thioester-linked Ube2N~ubiquitin conjugate, catalyzing an intramolecular transglutamination reaction, covalently crosslinking the Ube2N and Ub subunits effectively inactivating the E2~Ub conjugate. Ubiquitin exhibits weak binding to MavC alone, but shows an increase in affinity when tethered to Ube2N in a disulfide-linked substrate that mimics the charged E2~Ub conjugate. Crystal structures of MavC in complex with the substrate mimic and crosslinked product provide insights into the reaction mechanism and underlying protein dynamics that favor transamidation over deamidation, while revealing a crucial role for the structurally unique insertion domain in substrate recognition. This work provides a structural basis of ubiquitination by transglutamination and identifies this enzyme's true physiological substrate.