Ubiquitylation is a necessary step in the endocytosis and lysosomal trafficking of many plasma membrane proteins and can also influence protein trafficking in the biosynthetic pathway. Although a molecular understanding of ubiquitylation in these processes is beginning to emerge, very little is known about the role deubiquitylation may play. Fat Facets in mouse (FAM) is substrate-specific deubiquitylating enzyme highly expressed in epithelia where it interacts with its substrate, beta-catenin. Here we show, in the polarized intestinal epithelial cell line T84, FAM localized to multiple points of protein trafficking. FAM interacted with beta-catenin and E-cadherin in T84 cells but only in subconfluent cultures. FAM extensively colocalized with beta-catenin in cytoplasmic puncta but not at sites of cell-cell contact as well as immunoprecipitating with beta-catenin and E-cadherin from a higher molecular weight complex ( approximately 500 kDa). At confluence FAM neither colocalized with, nor immunoprecipitated, beta-catenin or E-cadherin, which were predominantly in a larger molecular weight complex ( approximately 2 MDa) at the cell surface. Overexpression of FAM in MCF-7 epithelial cells resulted in increased beta-catenin levels, which localized to the plasma membrane. Expression of E-cadherin in L-cell fibroblasts resulted in the relocalization of FAM from the Golgi to cytoplasmic puncta. These data strongly suggest that FAM associates with E-cadherin and beta-catenin during trafficking to the plasma membrane.