DNA polymerase eta (Pol η) is a Y-family translesion polymerase responsible for synthesizing new DNA across UV-damaged templates. It is recruited to replication forks following mono-ubiquitination of the PCNA DNA clamp. This interaction is mediated by PCNA-interacting protein (PIP) motifs within Pol η, as well as by its C-terminal ubiquitin-binding zinc finger (UBZ) domain. Previous work has suggested that Pol η itself is mono-ubiquitinated at four C-terminal lysine residues, which is dependent on prior ubiquitin-binding by its UBZ domain. Here, we show that Pol η can be modified at the same lysine residues by the ubiquitin-like protein, NEDD8. Like ubiquitination, this modification is driven by non-covalent interactions between NEDD8 and the UBZ domain. While only a small proportion of Pol η is mono-NEDDylated under normal conditions, these levels rapidly increase by inhibiting the COP9 signalosome, suggesting that mono-NEDDylation is maintained under strong negative regulation. Finally, we provide data to support that mono-ubiquitination is important for Pol η foci formation and suggest that NEDDylation disrupts this process. These results reveal a new mechanism of Pol η regulation by ubiquitin-like proteins.