Destabilization of activator-DNA complexes by the proteasomal ATPases can inhibit transcription by limiting activator interaction with DNA. Modification of the activator by monoubiquitylation protects the activator from this destabilization activity. In this study, we probe the mechanism of this protective effect of monoubiquitylation. Using novel label transfer and chemical cross-linking techniques, we show that ubiquitin contacts the ATPase complex directly, apparently via Rpn1 and Rpt1. This interaction results in the dissociation of the activation domain-ATPase complex via an allosteric process. A model is proposed in which activator monoubiquitylation serves to limit the lifetime of the activator-ATPase complex interaction and thus the ability of the ATPases to unfold the activator and dissociate the protein-DNA complex.