OTUB1 is one of the most highly expressed deubiquitinases, counter-regulating the two most abundant ubiquitin chain types. OTUB1 expression is linked to the development and progression of lung cancer and idiopathic pulmonary fibrosis in humans. However, the physiological function of OTUB1 is unknown. Here, we show that constitutive whole-body Otub1 deletion in mice leads to perinatal lethality by asphyxiation. Analysis of (single-cell) RNA sequencing and proteome data demonstrated that OTUB1 is expressed in all lung cell types with a particularly high expression during late-stage lung development (E16.5, E18.5). At E18.5, the lungs of animals with Otub1 deletion presented with increased cell proliferation that decreased saccular air space and prevented inhalation. Flow cytometry-based analysis of E18.5 lung tissue revealed that Otub1 deletion increased proliferation of major lung parenchymal and mesenchymal/other non-hematopoietic cell types. Adult mice with conditional whole-body Otub1 deletion (wbOtub1 ) also displayed increased lung cell proliferation in addition to hyperventilation and failure to adapt the respiratory pattern to hypoxia. On the molecular level, Otub1 deletion enhanced mTOR signaling in embryonic and adult lung tissues. Based on these results, we propose that OTUB1 is a negative regulator of mTOR signaling with essential functions for lung cell proliferation, lung development, adult lung tissue homeostasis, and respiratory regulation.