© 2016 by The American Society for Biochemistry and Molecular Biology, Inc. Deubiquitinases are important components of the protein degradation regulatory network. We report the discovery of ML364, a small molecule inhibitor of the deubiquitinase USP2 and its use to interrogate the biology of USP2 and its putative substrate cyclin D1. ML364 has an IC50 of 1.1 μM in a biochemical assay using an internally quenched fluorescent di-ubiquitin substrate. Direct binding of ML364 to USP2 was demonstrated using microscale thermophoresis. ML364 induced an increase in cellular cyclin D1 degradation and caused cell cycle arrest as shown in Western blottings and flow cytometry assays utilizing both Mino and HCT116 cancer cell lines. ML364, and not the inactive analog 2, was antiproliferative in cancer cell lines. Consistent with the role of cyclin D1 in DNA damage response, ML364 also caused a decrease in homologous recombination-mediated DNA repair. These effects by a small molecule inhibitor support a key role for USP2 as a regulator of cell cycle, DNA repair, and tumor cell growth.