Thiol-dependent isopeptidase that recognizes and hydrolyzes the peptide bond at the C-terminal Gly of UFM1, a ubiquitin-like modifier protein bound to a number of target proteins. Does not hydrolyze SUMO1 or ISG15 ubiquitin-like proteins. Through TRIP4 deufmylation may regulate intracellular nuclear receptors transactivation and thereby regulate cell proliferation and differentiation. Interacts with DDRGK1. Interacts with TRIP4; deufmylates TRIP4. Belongs to the peptidase C78 family.