Despite its central role in protein degradation little is known about the molecular mechanisms that sense, maintain, and regulate steady state concentration of ubiquitin in the cell. Here, we describe a novel mechanism for regulation of ubiquitin homeostasis that is mediated by phosphorylation of ubiquitin at the Ser57 position. We find that loss of Ppz phosphatase activity leads to defects in ubiquitin homeostasis that are at least partially attributable to elevated levels of Ser57 phosphorylated ubiquitin. Phosphomimetic mutation at the Ser57 position of ubiquitin conferred increased rates of endocytic trafficking and ubiquitin turnover. These phenotypes are associated with bypass of recognition by endosome-localized deubiquitylases - including Doa4 which is critical for regulation of ubiquitin recycling. Thus, ubiquitin homeostasis is significantly impacted by the rate of ubiquitin flux through the endocytic pathway and by signaling pathways that converge on ubiquitin itself to determine whether it is recycled or degraded in the vacuole.