Ubiquitin is a small polypeptide that covalently modifies other cellular proteins and targets them to the proteasome for degradation. In recent years, ubiquitin-dependent proteolysis has been demonstrated to play a critical role in the regulation of many cellular processes, such as cell cycle progression, cell signaling, and immune recognition. The recent discovery of three new ubiquitin-like proteins, NEDD8, Sentrin/SUMO, and Apg12, has further broadened the horizon of this type of post-translational protein modification. This review will focus on the biology and biochemistry of the Sentrin/SUMO and NEDD8 modification pathways, which are clearly distinct from the ubiquitination pathway and have unique biological functions.