The tumor suppressor CYLD belongs to a ubiquitin (Ub)-specific protease (USP) family and specifically cleaves Met1- and Lys63-linked polyubiquitin chains to suppress inflammatory signaling pathways. Here, we report crystal structures representing the catalytic states of zebrafish CYLD for Met1- and Lys63-linked Ub chains and two distinct precatalytic states for Met1-linked chains. In both catalytic states, the distal Ub is bound to CYLD in a similar manner, and the scissile bond is located close to the catalytic residue, whereas the proximal Ub is bound in a manner specific to Met1- or Lys63-linked chains. Further structure-based mutagenesis experiments support the mechanism by which CYLD specifically cleaves both Met1- and Lys63-linked chains and provide insight into tumor-associated mutations of CYLD. This study provides new structural insight into the mechanisms by which USP family deubiquitinating enzymes recognize and cleave Ub chains with specific linkage types.