The ubiquitin/proteasome system has been proposed to play an important role in Alzheimer's disease (AD) pathogenesis. However, the critical factor(s) modulating both amyloid-β peptide (Aβ) neurotoxicity and ubiquitin/proteasome system in AD are not known. We report the isolation of an unusual ubiquitin-conjugating enzyme, E2-25K/Hip-2, as a mediator of Aβ toxicity. The expression of E2-25K/Hip-2 was upregulated in the neurons exposed to Aβ_1-42 in vivo and in culture. Enzymatic activity of E2-25K/Hip-2 was required for both Aβ_1-42 neurotoxicity and inhibition of proteasome activity. E2-25K/Hip-2 functioned upstream of apoptosis signal-regulating kinase 1 (ASK1) and c-Jun N-terminal kinase (JNK) in Aβ_1-42 toxicity. Further, the ubiquitin mutant, UBB+1, a potent inhibitor of the proteasome which is found in Alzheimer's brains, was colocalized and functionally interacted with E2-25K/Hip-2 in mediating neurotoxicity. These results suggest that E2-25K/Hip-2 is a crucial factor in regulating Aβ neurotoxicity and could play a role in the pathogenesis of Alzheimer's disease.