Cellular FLIP (cFLIP) is a homologue of caspase-8 without protease activity that inhibits the apoptosis signaling initiated by death receptor ligation. We previously reported that a long form of cFLIP (cFLIP-L) inhibits ubiquitylation of beta-catenin and enhances Wnt signaling. Here we show that cFLIP-L impairs the function of the ubiquitin-proteasome system (UPS), and increases the accumulation of various short-lived proteins, such as GFP conjugated with destabilization sequence, beta-catenin and HIF1 alpha, that are subjected to rapid ubiquitylation and degradation by proteasomes. Accordingly, beta-catenin- and HIF1 alpha-mediated gene expressions are induced in the cFLIP-L-expressing cells. Exogenously expressed cFLIP-L accumulates in aggregates at the peri-nuclear region in the cells, and the cFLIP-L aggregates are refractory to solubilization. Like exogenously expressed cFLIP-L, the endogenous cFLIP in A549 lung cancer cells displays particulate distribution in the cells and more than 60% of cFLIP-L is refractory to solubilization. Down-regulation of cFLIP in A549 cells by RNA-mediated interference reduced beta-catenin- and HIF1 alpha-mediated gene expression. These results suggest that cFLIP-L is prone to aggregate and impairs UPS function, which could be involved in the pathological function of cFLIP-L expressed in certain cancer cells.