Excessive activation of dendritic cells (DCs) leads to the development of autoimmune and inflammatory diseases, which has prompted a search for regulators of DC activation. Here we report that Rhbdd3, a member of the rhomboid family of proteases, suppressed the activation of DCs and production of interleukin 6 (IL-6) triggered by Toll-like receptors (TLRs). Rhbdd3-deficient mice spontaneously developed autoimmune diseases characterized by an increased abundance of the TH17 subset of helper T cells and decreased number of regulatory T cells due to the increase in IL-6 from DCs. Rhbdd3 directly bound to Lys27 (K27)-linked polyubiquitin chains on Lys302 of the modulator NEMO (IKKγ) via the ubiquitin-binding-association (UBA) domain in endosomes. Rhbdd3 further recruited the deubiquitinase A20 via K27-linked polyubiquitin chains on Lys268 to inhibit K63-linked polyubiquitination of NEMO and thus suppressed activation of the transcription factor NF-κB in DCs. Our data identify Rhbdd3 as a critical regulator of DC activation and indicate K27-linked polyubiquitination is a potent ubiquitin-linked pattern involved in the control of autoimmunity.