Ubiquitin-like proteins (Ubls) share some features with ubiquitin (Ub) such as their globular 3D structure and the ability to attach covalently to other proteins. Interferon Stimulated Gene 15 (ISG15) is an abundant Ubl that similar to Ub, marks many hundreds of cellular proteins, altering their fate. In contrast to Ub, , ISG15 requires interferon (IFN) induction to conjugate efficiently to other proteins. Moreover, despite the multitude of E3 ligases for Ub-modified targets, a single E3 ligase termed HERC5 (in humans) is responsible for the bulk of ISG15 conjugation. Targets include both viral and cellular proteins spanning an array of cellular compartments and metabolic pathways. So far, no common structural or biochemical feature has been attributed to these diverse substrates, raising questions about how and why they are selected. Conjugation of ISG15 mitigates some viral and bacterial infections and is linked to a lower viral load pointing to the role of ISG15 in the cellular immune response. In an apparent attempt to evade the immune response, some viruses try to interfere with the ISG15 pathway. For example, deconjugation of ISG15 appears to be an approach taken by coronaviruses to interfere with ISG15 conjugates. Specifically, coronaviruses such as SARS-CoV, MERS-CoV, and SARS-CoV-2, encode papain-like proteases (PL1pro) that bear striking structural and catalytic similarities to the catalytic core domain of eukaryotic deubiquitinating enzymes of the Ubiquitin-Specific Protease (USP) sub-family. The cleavage specificity of these PLpro enzymes is for flexible polypeptides containing a consensus sequence (R/K)LXGG, enabling them to function on two seemingly unrelated categories of substrates: (i) the viral polyprotein 1 (PP1a, PP1ab) and (ii) Ub- or ISG15-conjugates. As a result, PLpro enzymes process the viral polyprotein 1 into an array of functional proteins for viral replication (termed non-structural proteins; NSPs), and it can remove Ub or ISG15 units from conjugates. However, by de-conjugating ISG15, the virus also creates free ISG15, which in turn may affect the immune response in two opposite pathways: free ISG15 negatively regulates IFN signaling in humans by binding non-catalytically to USP18, yet at the same time free ISG15 can be secreted from the cell and induce the IFN pathway of the neighboring cells. A deeper understanding of this protein-modification pathway and the mechanisms of the enzymes that counteract it will bring about effective clinical strategies related to viral and bacterial infections.