The Carma1-Bcl10-Malt1 signaling module bridges TCR signaling to the canonical IkappaB kinase (IKK)/NF-kappaB pathway. Covalent attachment of regulatory ubiquitin chains to Malt1 paracaspase directs TCR signaling to IKK activation. Further, the ubiquitin-editing enzyme A20 was recently suggested to suppress T cell activation, but molecular targets for A20 remain elusive. In this paper, we show that A20 regulates the strength and duration of the IKK/NF-kappaB response upon TCR/CD28 costimulation. By catalyzing the removal of K63-linked ubiquitin chains from Malt1, A20 prevents sustained interaction between ubiquitinated Malt1 and the IKK complex and thus serves as a negative regulator of inducible IKK activity. Upon T cell stimulation, A20 is rapidly removed and paracaspase activity of Malt1 has been suggested to cleave A20. Using antagonistic peptides or reconstitution of Malt1(-/-) T cells, we show that Malt1 paracaspase activity is required for A20 cleavage and optimal IL-2 production, but dispensable for initial IKK/NF-kappaB signaling in CD4(+) T cells. However, proteasomal inhibition impairs A20 degradation and impedes TCR/CD28-induced IKK activation. Taken together, A20 functions as a Malt1 deubiquitinating enzyme and proteasomal degradation and de novo synthesis of A20 contributes to balance TCR/CD28-induced IKK/NF-kappaB signaling.