ADP-ribosylation of proteins is emerging as an important regulatory mechanism. Depending on the family member, ADP-ribosyltransferases either conjugate a single ADP-ribose to a target or generate ADP-ribose chains. Here we characterize Parp9, a mono-ADP-ribosyltransferase reported to be enzymatically inactive. Parp9 undergoes heterodimerization with Dtx3L, a histone E3 ligase involved in DNA damage repair. We show that the Dtx3L/Parp9 heterodimer mediates NAD⁺-dependent mono-ADP-ribosylation of ubiquitin, exclusively in the context of ubiquitin processing by E1 and E2 enzymes. Dtx3L/Parp9 ADP-ribosylates the carboxyl group of Ub Gly76. Because Gly76 is normally used for Ub conjugation to substrates, ADP-ribosylation of the Ub carboxyl terminus precludes ubiquitylation. Parp9 ADP-ribosylation activity therefore restrains the E3 function of Dtx3L. Mutation of the NAD⁺ binding site in Parp9 increases the DNA repair activity of the heterodimer. Moreover, poly(ADP-ribose) binding to the Parp9 macrodomains increases E3 activity. Dtx3L heterodimerization with Parp9 enables NAD⁺ and poly(ADP-ribose) regulation of E3 activity.