Protein UFMylation, i.e., post-translational modification with ubiquitin-fold modifier 1 (UFM1), is essential for cellular and endoplasmic reticulum homeostasis. Despite its biological importance, we have a poor understanding of how UFM1 is conjugated onto substrates. Here, we use a rebuilding approach to define the minimal requirements of protein UFMylation. We find that the reported cognate E3 ligase UFL1 is inactive on its own and instead requires the adaptor protein UFBP1 to form an active E3 ligase complex. Structure predictions suggest the UFL1/UFBP1 complex to be made up of winged helix (WH) domain repeats. We show that UFL1/UFBP1 utilizes a scaffold-type E3 ligase mechanism that activates the UFM1-conjugating E2 enzyme, UFC1, for aminolysis. Further, we characterize a second adaptor protein CDK5RAP3 that binds to and forms an integral part of the ligase complex. Unexpectedly, we find that CDK5RAP3 inhibits UFL1/UFBP1 ligase activity in vitro. Results from reconstituting ribosome UFMylation suggest that CDK5RAP3 functions as a substrate adaptor that directs UFMylation to the ribosomal protein RPL26. In summary, our reconstitution approach reveals the biochemical basis of UFMylation and regulatory principles of this atypical E3 ligase complex.