Monoubiquitination serves as a regulatory signal in a variety of cellular processes. Monoubiquitin signals are transmitted by binding to a small but rapidly expanding class of ubiquitin binding motifs. Several of these motifs, including the CUE domain, also promote intramolecular monoubiquitination. The solution structure of a CUE domain of the yeast Cue2 protein in complex with ubiquitin reveals intermolecular interactions involving conserved hydrophobic surfaces, including the Leu8-Ile44-Val70 patch on ubiquitin. The contact surface extends beyond this patch and encompasses Lys48, a site of polyubiquitin chain formation. This suggests an occlusion mechanism for inhibiting polyubiquitin chain formation during monoubiquitin signaling. The CUE domain shares a similar overall architecture with the UBA domain, which also contains a conserved hydrophobic patch. Comparative modeling suggests that the UBA domain interacts analogously with ubiquitin. The structure of the CUE-ubiquitin complex may thus serve as a paradigm for ubiquitin recognition and signaling by ubiquitin binding proteins.