gamma2-Adaptin is a putative member of the clathrin adaptor protein family with unknown physiological function. We previously reported that gamma2-adaptin acts as a ubiquitin receptor by virtue of its ubiquitin-interacting motif. Here we demonstrate that this motif mediates a specific physical interaction with the ubiquitin ligase Nedd4 and promotes ubiquitination of gamma2-adaptin. By mapping regions of Nedd4 involved in binding to gamma2-adaptin, we identified its C2 domain to be essential, whereas the WW and HECT domains are dispensable. Consistent with this, we uncovered that the C2 domain of Nedd4 is ubiquitinated itself and as such is recruited by the ubiquitin-interacting motif of gamma2-adaptin for subsequent ubiquitin conjugation. Unlike known coupled ubiquitination reactions, this novel type of interaction leads to mono- and multi/polyubiquitinated gamma2-adaptin. In addition, we show that gamma2-adaptin functions in the endosomal/multivesicular body (MVB) pathway. Depletion of gamma2-adaptin impairs the degradation of internalized epidermal growth factor and results in defective MVB morphology characterized by significantly enlarged vesicles. These defects cannot be rescued by gamma1-adaptin, a closely related homolog of gamma2-adaptin, which is unable to bind ubiquitin. Together, these results indicate that gamma2-adaptin may operate within the MVB sorting system in a manner different from that of classic adaptins.