Protein ubiquitylation is involved in the regulation of virtually all aspects of eukaryotic cell biology, including gene expression. The central function of E3 ubiquitin ligases in target selection is well established. More recently, it has become appreciated that deubiquitylating enzymes (DUBs) are crucial components of ubiquitin-regulated cellular switches. Here, we discuss advances in our understanding of how DUBs regulate chromatin dynamics and gene expression. DUBs are integral components of the transcription machinery, involved in both gene activation and repression. They modulate the ubiquitylation status of histones H2A and H2B, which play pivotal roles in a cascade of molecular events that determine chromatin status. A DUB module in the SAGA coactivator complex is required for gene activation, whereas other DUBs are part of the Polycomb gene-silencing machinery. DUBs also control the level or subcellular compartmentalization of selective transcription factors, including the tumour suppressor p53. Typically, DUB specificity and activity are defined by its partner proteins, enabling remarkably versatile and sophisticated regulation. Recent findings not only underscore the pervasive and pivotal role of DUBs in gene expression control, but also raise paradoxical questions concerning the molecular mechanisms involved.