Deubiquitinase essential for the regulation of nucleolar structure and function. Required for cell and organism viability. Plays an important role in ribosomal RNA processing and protein synthesis, which is mediated, at least in part, through deubiquitination of DHX33, NPM1 and FBL, regulating their protein stability (PubMed:29273634). Functions as a transcriptional repressor by deubiquiting histone H2B at the promoters of genes critical for cellular differentiation, such as CDKN1A, thereby preventing histone H3 'Lys-4' trimethylation (H3K4). Specifically deubiquitinates MYC in the nucleolus, leading to prevent MYC degradation by the proteasome: acts by specifically interacting with isoform 3 of FBXW7 (FBW7gamma) in the nucleolus and counteracting ubiquitination of MYC by the SCF(FBW7) complex. In contrast, it does not interact with isoform 1 of FBXW7 (FBW7alpha) in the nucleoplasm. Interacts to and regulates the actions of E3 ubiquitin-protein ligase NEDD4L over substrates such as NTRK1, KCNQ2 and KCNQ3, affecting their expression an functions. Deubiquitinates SOD2, regulates SOD2 protein stability. Deubiquitinase activity is required to control selective autophagy activation by ubiquitinated proteins (By similarity). Thiol-dependent hydrolysis of ester, thioester, amide, peptide and isopeptide bonds formed by the C-terminal Gly of ubiquitin (a 76-residue protein attached to proteins as an intracellular targeting signal). Interacts with isoform 3 of FBXW7; the interaction inhibits MYC degradation induced by SCF(FBW7) complex. Interacts with NTRK1; USP36 does not deubiquitinate NTRK1. Interacts with NEDD4L (via domains WW1, 3 and 4); the interaction inhibits ubiquitination of, at least, NTRK1, KCNQ2 and KCNQ3 by NEDD4L. Polyubiquitinated by NEDD4L, no effect on USP36 protein levels. Both proteins interact with and regulate each other's ubiquitination levels. Embryonic lethality (PubMed:29273634). Embryos show apoptosis at the morula stage, blocking the transition from morula to blastocysts during embryonic development (PubMed:29273634). Belongs to the peptidase C19 family. Extended N-terminus.