Cytokines regulate cell growth by inducing the expression of specific target genes. We have recently identified a cytokine-inducible, immediate-early gene, DUB-1, that encodes a deubiquitinating enzyme with growth regulatory activity. In the current study, we have isolated a highly related gene, DUB-2, that is induced by interleukin-2. The DUB-2 mRNA was induced in T cells as an immediate-early gene and was rapidly down-regulated. Like DUB-1, the DUB-2 protein had deubiquitinating activity in vitro. When a conserved cysteine residue of DUB-2, required for ubiquitin-specific thiol protease activity, was mutated to serine (C60S), deubiquitinating activity was abolished. DUB-1 and DUB-2 proteins are highly related throughout their primary amino acid sequence except for a hypervariable region at their COOH terminus. Moreover, the DUB genes co-localize to a region of mouse chromosome 7, suggesting that they arose by a tandem duplication of an ancestral DUB gene. Additional DUB genes co-localize to this region, suggesting a larger family of cytokine-inducible DUB enzymes. We propose that different cytokines induce specific DUB genes. Each induced DUB enzyme thereby regulates the degradation or the ubiquitination state of an unknown growth regulatory factor, resulting in a cytokine-specific growth response.