Ubiquitin binding proteins regulate the stability, function, and/or localization of ubiquitinated proteins. All characterized ubiquitin binding domains recognize a hydrophobic patch on ubiquitin containing I44. Here we report the crystal structures of the zinc finger ubiquitin-binding domain (ZnF UBP) from the deubiquitinating enzyme Isopeptidase T (IsoT or USP5), alone and in complex with ubiquitin. Notably, this domain does not interact with I44 or the surrounding hydrophobic residues. The ZnF UBP contains a deep binding pocket where the C-terminal diglycine motif of ubiquitin is inserted, explaining the specificity of IsoT for an intact C-terminus on the proximal subunit of polyubiquitin. Mutations of the Zn ligands demonstrate that this domain is required for ubiquitin binding and catalytic activation of IsoT. The ZnF UBP domain is present in several proteins involved in ubiquitin metabolism, suggesting that other proteins bearing this domain may share this novel mode of ubiquitin recognition. This work is supported in part by a NIH training grant (5T32GM008367 to FER), NIH grant GM30308 to KDW, and NIH grant GM068680 (to JRH and XC).