The proteasome recognizes target proteins that have been covalently marked by ubiquitin chains. The ubiquitin signal is subject to rapid editing at the proteasome, allowing it to reject substrates based on topological features of their attached ubiquitin chains. Editing is mediated by a key regulator of the proteasome, deubiquitinating enzyme Ubp6. The proteasome activates Ubp6, whereas Ubp6 inhibits the proteasome–both by deubiquitinating proteasome-bound ubiquitin conjugates, and through a noncatalytic effect that does not involve deubiquitination. We report mutants in both Ubp6 and proteasome subunit Rpt1 that abrogate Ubp6 activation. The Ubp6 mutations fall within its ILR element, defined here, which is conserved from yeast to mammals. The ILR is a component of the BL1 blocking loop, other parts of which obstruct ubiquitin access to the catalytic groove in free Ubp6. Rpt1 docking at the ILR opens the catalytic groove by rearranging not only BL1 but also a novel network of three directly interconnected active-site-blocking loops. Ubp6 activation and noncatalytic proteasome inhibition by Ubp6 are linked in that they were eliminated by the same Ubp6 and Rpt1 mutations. Ubp6 and ubiquitin together drive the proteasome into a unique conformational state associated with proteasome inhibition. Our results identify a multicomponent allosteric switch that exerts simultaneous control over the activity of both Ubp6 and the proteasome, and suggest that their active states are in general mutually exclusive.