Degradation of cellular proteins via the ubiquitin-proteasome system (UPS) involves: (i) generation of a substrate-anchored polyubiquitin degradation signal and (ii) destruction of the tagged protein by the 26S proteasome with release of free and reusable ubiquitin. For most substrates, it is believed that the first ubiquitin moiety is conjugated to a epsilon-NH(2) group of an internal Lys residue. Recent findings indicate that for several proteins, the first ubiquitin moiety is fused, in a linear manner, to the free alpha-NH(2) group of the protein. Here, we demonstrate that the inhibitor of differentiation (or inhibitor of DNA binding) 2, Id2, that downregulates gene expression in undifferentiated and self-renewing cells, is degraded by the UPS following ubiquitination at its N-terminal residue. Lysine-less (LL) Id2 is degraded efficiently by the proteasome following ubiquitination. Fusion of a Myc tag to the N-terminal but not to the C-terminal residue of Id2 stabilizes the protein. Furthermore, deletion of the first 15 N-terminal residues of Id2 stabilizes the protein, suggesting that this domain serves as a recognition element, possibly for the ubiquitin ligase, E3. The mechanisms and structural motives that govern Id2 stability may have important implications to the regulation of the protein during normal differentiation and malignant transformation.