The linear ubiquitin (Ub) chain assembly complex (LUBAC) is an E3 ligase that specifically assembles Met1-linked (also known as linear) Ub chains that regulate nuclear factor kappaB (NF-kappaB) signaling. Deubiquitinases (DUBs) are key regulators of Ub signaling, but a dedicated DUB for Met1 linkages has not been identified. Here, we reveal a previously unannotated human DUB, OTULIN (also known as FAM105B), which is exquisitely specific for Met1 linkages. Crystal structures of the OTULIN catalytic domain in complex with diubiquitin reveal Met1-specific Ub-binding sites and a mechanism of substrate-assisted catalysis in which the proximal Ub activates the catalytic triad of the protease. Mutation of Ub Glu16 inhibits OTULIN activity by reducing kcat 240-fold. OTULIN overexpression or knockdown affects NF-kappaB responses to LUBAC, TNFalpha, and poly(I:C) and sensitizes cells to TNFalpha-induced cell death. We show that OTULIN binds LUBAC and that overexpression of OTULIN prevents TNFalpha-induced NEMO association with ubiquitinated RIPK1. Our data suggest that OTULIN regulates Met1-polyUb signaling.