The ORF29 gene of varicella-zoster virus encodes a single-stranded DNA binding protein that is predominantly nuclear during lytic infection but appears to be restricted to the cytoplasm of latently infected neurons. Following reactivation, OMF29p accumulates in the nuclei of neurons, suggesting that its confinement to the cytosol may be critical for maintaining quiescence. When autonomously expressed, ORF29p accumulates in the nuclei of fibroblasts and the cytoplasm of cells (guinea pig enteric neurons) and cell lines (U373MG) of neuronal origin. Inhibition of the 26S proteasome redirects the accumulation of ORF29p to the nucleus in cells of neuronal origin. Here, we show that ORF29p is ubiquitinated and sumoylated in 293T cells and subsequently degraded from the N terminus. Ubiquitinated ORF29p accumulates in both the nuclei and the cytoplasm of fibroblasts, but degradation products are seen primarily in the cytoplasm. Modification and degradation of ORF29p occurs in 293T, U373MG, and MeWo cells. Therefore, these processes are ubiquitous; however, the robustness of the degradation process is cell type specific. The proteasome-mediated mechanism of nuclear exclusion in U373MG cells is an active process that is not specific for the endogenous ORF29p nuclear localization signal but can be saturated by protein stabilization or overexpression, which leads to nuclear accumulation of ORF29p. The evidence for ORF29p ubiquitination and previous data regarding the effect of proteasome inhibitors on the abundance and distribution of ORF29p implicate the 26S proteasome in influencing the protein's cell type-specific localization.