1) Background: Deubiquitinase (DUB) regulates various important cellular processes via reversing the protein ubiquitination. The N-terminal fragment of a giant tegument protein, UL36, encoded by the Marek's disease (MD) virus (MDV), encompasses a putative DUB (UL36-DUB) and shares no homology with any known DUBs. The N-terminus 75 kDa fragment of UL36 exists in MD T lymphoma cells at a high level and participates in MDV pathogenicity. (2) Methods: To characterize deubiquitinating activity and substrate specificity of UL36-DUB, the UL36 N-terminal fragments, UL36(323), UL36(480), and mutants were prepared using the Bac-to-Bac system. The deubiquitinating activity and substrate specificity of these recombinant UL36-DUBs were analyzed using various ubiquitin (Ub) or ubiquitin-like (UbL) substrates and activity-based deubiquitinating enzyme probes.(3) Results: The results indicated that wild type UL36-DUBs show a different hydrolysis ability against varied types of ubiquitin chains. These wild type UL36-DUBs presented the highest activity to K11, K48, and K63 linkage Ub chains, weak activity to K6, K29, and K33 Ub chains, and no activity to K27 linkage Ub chain. UL36 has higher cleavage efficiency for K48 and K63 poly-ubiquitin than linear ubiquitin chain (M1-Ub4), but no activity on various ubiquitin-like modifiers. The mutation of C98 and H234 residues eliminated the deubiquitinating activity of UL36-DUB. D232A mutation impacted, but did not eliminated UL36(480) activity. The Ub-Br probe can bind to wild type UL36-DUB and mutants UL36(480) H234A and UL36(480) D232A , but not C98 mutants. These in vitro results suggested that the C98 and H234 are essential catalytic residues of UL36-DUB. UL36-DUB exhibited a strict substrate specificity. Inhibition assay revealed that UL36-DUB exhibits resistance to the Roche protease inhibitor cocktail and serine protease inhibitor, but not to the Solarbio protease inhibitor cocktail. (4) Conclusions: UL36-DUB exhibited a strict substrate preference, and the protocol developed in the current study for obtaining active UL36-DUB protein should promote the high-throughput screening of UL36 inhibitors and the study on the function of MDV-encoded UL36.