Ubiquitin-proteasome system, the essential mechanism for eukaryotic cellular protein degradation, plays an important role in the regulation of cellular physiological functions. In 1980s, researchers found that proteasome also reside in actinomycetes, but the function and mechanism of the prokaryotic proteasome were unknown. In 2008, the prokaryotic ubiquitin-like protein (Pup) was identified in Mycobacterium tuberculosis. With the help of accessory factors, Dop, PafA and Mpa, Pup covalently linked to the Lys ε-NH₂ in the target proteins and mediated the target protein degradation through the proteasome. The discovery of Pup-proteasome system revealed a novel mechanism of prokaryotic protein degradation, which is involved essential physiological function including the intermediary metabolism, information pathway, detoxification/virulence, cell wall and cell membrane formation and so on. Disruption of Pup-proteasome system can suppress the pathogenicity of Mycobacterium tuberculosis. Therefore it is regarded as the new therapeutic target for tuberculosis. In the present paper, the progress in the study on mechanism and function of Pup-proteasome system is reviewed.