Interferon-stimulated gene 15 (ISG15) is an interferon-stimulated gene and a ubiquitin-like protein, traditionally known for its role in ISGylation. In addition to its intracellular functions, recent studies have revealed a novel role for extracellular ISG15, particularly in the context of viral infections. Beyond type I interferons, various stimuli, including viral and bacterial infections, have been found to trigger its secretion. Notably, the integrin receptor LFA-1 has been identified as a receptor for extracellular ISG15. Despite these advancements, the precise mechanisms by which extracellular ISG15 functions-such as the pathways regulating its secretion and receptor interactions-remain unclear. Viral proteins and de-ISGylating enzymes are known to influence ISG15 secretion levels, thereby impacting its immunomodulatory potential. This mini-review summarizes the existing studies aimed at understanding the mechanisms behind the secretion and functions of extracellular ISG15, with a particular focus on its immunomodulatory effects during infection. We also explore the contrasting roles of extracellular ISG15 in mice and humans, highlighting the need for more species-specific research. Further investigation into the role of extracellular ISG15 may uncover novel therapeutic strategies for infectious diseases, cancer, and inflammatory conditions.