The yeast Ssy5 protein is a serine-type endoprotease autoprocessed into a catalytic domain and a large inhibitory prodomain. When external amino acids are detected by the plasma membrane Ssy1 sensor, Ssy5 is activated and catalyzes endoproteolytic processing of the Stp1 and Stp2 transcription factors. These Stp proteins then migrate into the nucleus and activate transcription of several amino acid permease genes. Previous studies showed that Ssy5 activation involves the SCFGrr1 ubiquitin ligase complex, but the molecular mechanisms of this activation remain unclear. We here report that the prodomain of Ssy5 is phosphorylated in a casein kinase I-dependent manner in response to amino acid detection. We describe a mutant form of Ssy5 whose prodomain is not phosphorylated and show that it is nonfunctional. Amino acid detection also induces ubiquitylation of the Ssy5 prodomain. This prodomain ubiquitylation requires its prior phosphorylation and the SCFGrr1 complex. When this ubiquitylation is defective, Ssy5 accumulates as a phosphorylated form but remains inactive. A constitutive Ssy5 form in which the prodomain fails to inhibit the catalytic domain does not need to be phosphorylated or ubiquitylated to be active. Finally, we provide evidence that ubiquitylation of the inhibitory prodomain rather than its subsequent degradation is the key step in the Ssy5 activation mechanism. We propose that the Ssy5 protease is activated by phosphorylation-induced ubiquitylation, the effect of which is relief from inhibition by its prodomain.