The ubiquitin proteasome pathway is responsible for most of the protein degradation in mammalian cells. Rates of degradation by this pathway have generally been assumed to be determined by rates of ubiquitylation. However, recent studies indicate that proteasome function is also tightly regulated and determines whether a ubiquitylated protein is destroyed or deubiquitylated and survives longer. This article reviews recent advances in our understanding of the proteasome's multistep ATP-dependent mechanism, its biochemical and structural features that ensure efficient proteolysis and ubiquitin recycling while preventing nonselective proteolysis, and the regulation of proteasome activity by interacting proteins and subunit modifications, especially phosphorylation.