Activation of thyroxine by outer ring deiodination is the crucial first step of thyroid hormone action. Substrate-induced ubiquitination of type 2 deiodinase (D2) is the most rapid and sensitive mechanism known to regulate thyroid hormone activation. While the molecular machinery responsible for D2 ubiquitination has been extensively studied, the combination of molecular features sufficient and required to allow D2 ubiquitination have not previously been determined. To address this question, we constructed chimeric deiodinases by introducing different combinations of D2-specific elements into type 1 deiodinase (D1), another member of the deiodinase enzyme family, which, however, does not undergo ubiquitination in its native form. Studies on the chimeric proteins expressed transiently in HEK-293T cells revealed that combined insertion of the D2-specific instability loop and the K237/K244 D2 ubiquitin carrier lysines into the corresponding positions of D1 could not ubiquitinate D1 unless the chimera was directed to the endoplasmic reticulum (ER). Fluorescence resonance energy transfer measurements demonstrated that the C-terminal globular domain of the ER-directed chimera was able to interact with the E3 ligase subunit WSB1. However, this interaction did not occur between the chimera and the TEB4 (MARCH6) E3 ligase, although a native D2 could readily interact with the N-terminus of TEB4. In conclusion, insertion of the instability loop and ubiquitin carrier lysines in combination with direction to the ER are sufficient and required to govern WSB1-mediated ubiquitination of an activating deiodinase enzyme.