Toll-like receptor 4 (TLR4) promotes vascular inflammatory disorders such as neointimal hyperplasia and atherosclerosis. TLR4 triggers NFκB signaling through the ubiquitin ligase TRAF6 (tumor necrosis factor receptor-associated factor 6). TRAF6 activity can be impeded by deubiquitinating enzymes like ubiquitin-specific protease 20 (USP20), which can reverse TRAF6 autoubiquitination, and by association with the multifunctional adaptor protein β-arrestin2. Although β-arrestin2 effects on TRAF6 suggest an anti-inflammatory role, physiologic β-arrestin2 promotes inflammation in atherosclerosis and neointimal hyperplasia. We hypothesized that anti- and proinflammatory dimensions of β-arrestin2 activity could be dictated by β-arrestin2's ubiquitination status, which has been linked with its ability to scaffold and localize activated ERK1/2 to signalosomes. With purified proteins and in intact cells, our protein interaction studies showed that TRAF6/USP20 association and subsequent USP20-mediated TRAF6 deubiquitination were β-arrestin2-dependent. Generation of transgenic mice with smooth muscle cell-specific expression of either USP20 or its catalytically inactive mutant revealed anti-inflammatory effects of USP20in vivoandin vitro Carotid endothelial denudation showed that antagonizing smooth muscle cell USP20 activity increased NFκB activation and neointimal hyperplasia. We found that β-arrestin2 ubiquitination was promoted by TLR4 and reversed by USP20. The association of USP20 with β-arrestin2 was augmented when β-arrestin2 ubiquitination was prevented and reduced when β-arrestin2 ubiquitination was rendered constitutive. Constitutive β-arrestin2 ubiquitination also augmented NFκB activation. We infer that pro- and anti-inflammatory activities of β-arrestin2 are determined by β-arrestin2 ubiquitination and that changes in USP20 expression and/or activity can therefore regulate inflammatory responses, at least in part, by defining the ubiquitination status of β-arrestin2.