Post‐translational modification is a rite of passage for cellular functional proteins and ultimately regulate almost all aspects of life. Ubiquitin‐fold modifier 1 (UFM1) system represents a newly identified ubiquitin‐like modification system with indispensable biological functions, and the underlying biological mechanisms remain largely undiscovered. The field has recently experienced a rapid growth of research revealing that UFMylation directly or indirectly regulates multiple immune processes. Here, we summarised important advances that how UFMylation system responds to intrinsic and extrinsic stresses under certain physiological or pathological conditions and safeguards immune homeostasis, providing novel perspectives into the regulatory framework and functions of UFMylation system, and its therapeutic applications in human diseases.