Unlike other nuclear receptors, transactivation by the glucocorticoid receptor (GR) is increased by the inhibition of the ubiquitin/proteasome pathway. Here, we demonstrate that the ubiquitin-conjugating enzyme (E2), UbcH7, physically interacts with the GR and, when overexpressed, reduces the ability of the receptor to upregulate gene expression. Chemical inhibition of the 26S proteasome abolished the downregulation effect of overexpressed UbcH7, suggesting a role for the 26S proteasome, and GR protein stability in mediating the UbcH7 effect. Furthermore, a UbcH7 dominant negative mutant (C89S), unable to transfer ubiquitin, failed to repress GR transactivation. Indeed, overexpression of the mutant UbcH7 was sufficient to augment GR transactivation to levels achieved using the proteasome inhibitor MG132, but there was no further induction when MG132 and the UbcH7 mutant were used together. Expression of the dominant negative UbcH7 abolished ligand-dependent downregulation of GR protein, suggesting that the UbcH7 effect was mediated by regulation of GR protein concentration. Taken together, these data show that UbcH7 is a key regulator of GR turnover and glucocorticoid sensitivity.