The familial cylindromatosis tumour suppressor CYLD contains three cytoskeleton-associated protein glycine-rich (CAP-Gly) domains and a deubiquitinase domain. The tumour-suppressing function of CYLD has been attributed to its deubiquitinase domain, which removes lysine-63-linked polyubiquitin chains from target proteins, leading to the inhibition of cell survival and proliferation. In this study, we have detected an interaction of CYLD with the mitotic kinase Aurora-B. The interaction is mediated by the third CAP-Gly domain of CYLD and results in suppression of Aurora-B activity. Mechanistic studies reveal that the inhibition of Aurora-B activity by CYLD is independent of its deubiquitinase activity. Instead, CYLD interacts with protein phosphatase 2A (PP2A) and promotes the ability of PP2A to bind and dephosphorylate Aurora-B at threonine-232. Cylindromatosis-associated truncating mutations of CYLD abolish its interaction with PP2A, its enhancing effect on the PP2A/Aurora-B interaction, and its inhibitory effect on Aurora-B activity. These findings uncover Aurora-B and PP2A as novel binding partners of CYLD and suggest that CYLD negatively regulates Aurora-B activity through acting on the PP2A axis.