Macrophage activation, including classical (M1) activation and alternative (M2) activation, plays important roles in host immune response and pathogenesis of diseases. Ubiquitination has been shown to be involved in the differentiation of immune cells and in the regulation of immune responses. However, the role of ubiquitination during M1 versus M2 polarization is poorly explored. Here, we showed that arginase 1 (Arg1), a well recognized marker of M2 macrophages, is highly up-regulated in peritoneal macrophages derived from E3 ubiquitin ligase Nrdp1 transgenic (Nrdp1-TG) mice. Furthermore, other M2 feature markers such as MR, Ym1, and Fizz1, as well as Th2 cytokine IL-10, are also up-regulated in Nrdp1-TG macrophages after IL-4 stimulation. Knockdown of Nrdp1 expression effectively inhibits IL-4-induced expression of M2-related genes in macrophages. Moreover, Nrdp1 inhibits LPS-induced production of inducible NOS and pro-inflammatory cytokines TNF-α, IL-1β, and IL-6 in macrophages. Immunoprecipitation assays show that Nrdp1 interacts with and ubiquitinates transcriptional factor C/EBPβ via Lys-63-linked ubiquitination. Nrdp1 enhances C/EBPβ-triggered transcriptional activation of the Arg1 reporter gene in the presence of IL-4 stimulation. Thus, we demonstrate that Nrdp1-mediated ubiquitination and activation of C/EBPβ contributes to a ubiquitin-dependent nonproteolytic pathway that up-regulates Arg1 expression and promotes M2 macrophage polarization.