KPC2 (Kip1 ubiquitylation-promoting complex 2) together with KPC1 forms the ubiquitin ligase KPC, which regulates degradation of the cyclin-dependent kinase inhibitor p27 at the G(1) phase of the cell cycle. KPC2 contains a ubiquitin-like (UBL) domain, two ubiquitin-associated (UBA) domains, and a heat shock chaperonin-binding (STI1) domain. We now show that KPC2 interacts with KPC1 through its UBL domain, with the 26S proteasome through its UBL and NH(2)-terminal UBA domains, and with polyubiquitylated proteins through its UBA domains. The association of KPC2 with KPC1 was found to stabilize KPC1 in a manner dependent on the STI1 domain of KPC2. KPC2 mutants that lacked either the NH(2)-terminal or the COOH-terminal UBA domain supported the polyubiquitylation of p27 in vitro, whereas a KPC2 derivative lacking the STI1 domain was greatly impaired in this regard. Depletion of KPC2 by RNA interference resulted in inhibition of p27 degradation at the G(1) phase, and introduction of KPC2 derivatives into the KPC2-depleted cells revealed that the NH(2)-terminal UBA domain of KPC2 is essential for p27 degradation. These observations suggest that KPC2 cooperatively regulates p27 degradation with KPC1 and that the STI1 domain as well as the UBL and UBA domains of KPC2 are indispensable for its function.