Beta-arrestin2 and its ubiquitination play crucial roles in both internalization and signaling of seven-transmembrane receptors (7TMRs). To understand the connection between ubiquitination and the endocytic and signaling functions of beta-arrestin, we generated a beta-arrestin2 mutant that is defective in ubiquitination (beta-arrestin2(0K)), by mutating all of the ubiquitin acceptor lysines to arginines and compared its properties with the wild type and a stably ubiquitinated beta-arrestin2-ubiquitin (Ub) chimera. In vitro translated beta-arrestin2 and beta-arrestin2(0K) displayed equivalent binding to recombinant beta(2)-adrenergic receptor (beta(2)AR) reconstituted in vesicles, whereas beta-arrestin2-Ub bound approximately 4-fold more. In cellular coimmunoprecipitation assays, beta-arrestin2(0K) bound nonreceptor partners, such as AP-2 and c-Raf and scaffolded phosphorylated ERK robustly but displayed weak binding to clathrin. Moreover, beta-arrestin2(0K) was recruited only transiently to activated receptors at the membrane, did not enhance receptor internalization, and decreased the amount of phosphorylated ERK assimilated into isolated beta(2)AR complexes. Although the wild type beta-arrestin2 formed ERK signaling complexes with the beta(2)AR at the membrane, a stably ubiquitinated beta-arrestin2-Ub chimera not only stabilized the ERK signalosomes but also led to their endosomal targeting. Interestingly, in cellular fractionation assays, the ubiquitination state of beta-arrestin2 favors its distribution in membrane fractions, suggesting that ubiquitination increases the propensity of beta-arrestin for membrane association. Our findings suggest that although beta-arrestin ubiquitination is dispensable for beta-arrestin cytosol to membrane translocation and its "constitutive" interactions with some cytosolic proteins, it nevertheless is a prerequisite both for the formation of tight complexes with 7TMRs in vivo and for membrane compartment interactions that are crucial for downstream endocytic and signaling processes.