Data from several studies suggest that the ubiquitin-proteasome system may play a role in the progression of atherosclerosis. Here, we examined the potential role of the deubiquitinating enzyme CYLD (cylindromatosis), mutation of which has been reported to cause familial cylindromatosis. Northern blot analysis revealed expression of CYLD mRNA in the aorta, as well as in cultured human aortic endothelial cells (ECs) and vascular smooth muscle cells. Treatment with recombinant tumor necrosis factor (TNF)-alpha significantly increased CYLD expression in ECs and vascular smooth muscle cells. Immunostaining showed CYLD expression in atherosclerotic lesions from human carotid arteries and up-regulation of CYLD expression in the neointima of rat carotid arteries after balloon injury. Overexpression of CYLD in ECs resulted in inhibition of TNF-alpha-induced nuclear factor-kappaB activity through deubiquitination of TNFR-associated factor 2 (TRAF2), whereas overexpression of catalytically inactive CYLD had no effect. CYLD overexpression also inhibited expression of cyclin D1 and activation of the E2F pathway through deubiquitination of the upstream molecule Bcl-3 and inhibition of its translocation into the nucleus. Overexpressed CYLD also significantly inhibited cell viability. Furthermore, overexpression of CYLD in rat balloon-injured carotid artery attenuated neointimal formation through inactivation of nuclear factor-kappaB and E2F. In conclusion, these data demonstrate that the deubiquitinating enzyme CYLD may inhibit inflammation and proliferation in vascular cells and may represent a novel target for the treatment or prevention of atherosclerosis.