Recent studies have established that type I interferon modulates expression of large number of cellular genes. While the proteins encoded by some of these genes have a direct antiviral activity, the functions of the majority of the others have not yet been determined. One of the first identified IFN stimulated gene, encodes ubiquitin like protein ISG15 that is also expressed in response to different stress stimuli. Although it was shown that ISG15 functions as protein modifier, it has been only recently that the targets of ISG15 conjugation were identified. Recent studies have also revealed mechanism of ISG15 conjugation and its interaction with the ubiquitin conjugation pathway. This review is focused on the possible role of ISG15 in the antiviral response, regulation of cell growth and carcinogenesis.