Protein ubiquitination plays a critical role in protein quality control in response to cellular stress. The excessive accumulation of ubiquitinated conjugates can be detrimental to cells and is recognized as a hallmark of multiple neurodegenerative diseases. However, an in-depth understanding of how the excessive ubiquitin chains are removed to maintain ubiquitin homeostasis post stress remains largely unclear. Here we found that caspase-2 (CASP2) accumulates in a ubiquitin and proteasome-positive biomolecular condensate, which we named ubstressome, following stress and functions as a deubiquitinase to remove overloaded ubiquitin chains on proteins prone to misfolding. Mechanistically, CASP2 binds to the poly-ubiquitinated conjugates through its allosteric ubiquitin-interacting motif-like region and decreases overloaded ubiquitin chains in a protease-dependent manner to promote substrate degradation. CASP2 deficiency in mice results in excessive accumulation of poly-ubiquitinated TAR DNA-binding protein 43, leading to motor defects. Our findings uncover a stress-evoked deubiquitinating activity of CASP2 in the maintenance of cellular ubiquitin homeostasis, which differs from the well-known roles of caspase in apoptosis and inflammation. These data also reveal unrecognized protein quality control functions of condensates in the removal of stress-induced ubiquitin chains.