A hallmark of most neurodegenerative diseases, including those caused by polyglutamine expansion, is the formation of ubiquitin (Ub)-positive protein aggregates in affected neurons. This finding suggests that the Ub system may be involved in common mechanisms underlying these otherwise unrelated diseases. Here we report the finding of ataxin-3 (Atx-3), whose mutation is implicated in the neurodegenerative disease spinocerebellar ataxia type 3, in a bioinformatics search of the human genome for components of the Ub system. We show that wild-type Atx-3 is a Ub-binding protein and that the interaction of Atx-3 with Ub is mediated by motifs homologous to those found in a proteasome subunit. Both wild-type Atx-3 and the otherwise unrelated Ub-binding protein p62/Sequestosome-1 have been shown to be sequestered into aggregates in affected neurons in several neurodegenerative diseases, but the mechanism for this recruitment has remained unclear. In this article, we show that functional Ub-binding motifs in Atx-3 and p62 proteins are required for the localization of both proteins into aggregates in a cell-based assay that recapitulates several features of polyglutamine disease. We propose that the Ub-mediated sequestration of essential Ub-binding protein(s) into aggregates may be a common mechanism contributing to the pathogenesis of neurodegenerative diseases.