In the middle of the 20th century, it was postulated that degradation of intracellular proteins is a stochastic process. More than fifty years of intense studies have finally proven that protein degradation is a very complex and tightly regulated in time and space process that plays an incredibly important role in the vast majority of metabolic pathways. Degradation of more than a half of intracellular proteins is controlled by a hierarchically aligned and evolutionarily perfect system consisting of many components, the main ones being ubiquitin ligases and proteasomes, together referred to as the ubiquitin–proteasome system (UPS). The UPS includes more than 1000 individual components, and most of them are critical for the cell functioning and survival. In addition to the well-known signaling functions of ubiquitination, such as modification of substrates for proteasomal degradation and DNA repair, polyubiquitin (polyUb) chains are involved in other important cellular processes, e.g., cell cycle regulation, immunity, protein degradation in mitochondria, and even mRNA stability. This incredible variety of ubiquitination functions is related to the ubiquitin ability to form branching chains through the ε-amino group of any of seven lysine residues in its sequence. Deubiquitination is accomplished by proteins of the deubiquitinating enzyme family. The second main component of the UPS is proteasome, a multisubunit proteinase complex that, in addition to the degradation of functionally exhausted and damaged proteins, regulates many important cellular processes through controlled degradation of substrates, for example, transcription factors and cyclins. In addition to the ubiquitin-dependent-mediated degradation, there is also ubiquitin-independent degradation, when the proteolytic signal is either an intrinsic protein sequence or shuttle molecule. Protein hydrolysis is a critically important cellular function; therefore, any abnormalities in this process lead to systemic impairments further transforming into serious diseases, such as diabetes, malignant transformation, and neurodegenerative disorders (multiple sclerosis, Alzheimer’s disease, Parkinson’s disease, Creutzfeldt–Jakob disease and Huntington’s disease). In this review, we discuss the mechanisms that orchestrate all components of the UPS, as well as the plurality of the fine-tuning pathways of proteasomal degradation.