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Abstract The Papain-like protease (PLpro) is a domain of a multi-functional, non-structural protein 3 of coronaviruses. PLpro cleaves viral polyproteins and posttranslational conjugates with poly-ubiquitin and protective ISG15, composed of two ubiquitin-like (UBL) domains. Across coronaviruses, PLpro showed divergent selectivity for recognition and cleavage of posttranslational conjugates despite sequence conservation. We show that SARS-CoV-2 PLpro binds human ISG15 and K48-linked di-ubiquitin (K48-Ub₂) with nanomolar affinity and detect alternate weaker-binding modes. Crystal structures of untethered PLpro complexes with ISG15 and K48-Ub₂combined with solution NMR and cross-linking mass spectrometry revealed how the two domains of ISG15 or K48-Ub₂are differently utilized in interactions with PLpro. Analysis of protein interface energetics predicted differential binding stabilities of the two UBL/Ub domains that were validated experimentally. We emphasize how substrate recognition can be tuned to cleave specifically ISG15 or K48-Ub₂modifications while retaining capacity to cleave mono-Ub conjugates. These results highlight alternative druggable surfaces that would inhibit PLpro function.