Since its emergence in the late 1980s, porcine reproductive and respiratory syndrome (PRRS) has been devastating the swine industry worldwide. The causative agent is an Arterivirus, referred to as PRRS virus (PRRSV). The pathogenic mechanisms of PRRS are poorly understood, but are believed to correlate with the ability of PRRSV to inhibit immune responses of the host. However, precisely how the virus is capable of doing so remains obscure. In this study, we showed that PRRSV infection led to reduced ubiquitination of cellular proteins. Screening all of the 12 nonstructural proteins (Nsps) encoded by PRRSV revealed that, apart from the Nsp2 which contains the deubiqintinating (DUB) ovarian tumor (OTU) domain, Nsp11, which encodes a unique and conserved endoribonuclease (NendoU) throughout the Nidovirus order, also possesses DUB activity. In vivo assay demonstrated that Nsp11 specifically removed lysine 48 (K48)-linked polyubiquitin chains and the conserved sites C112, H144, D173, K180, and Y219 were critical for its DUB activity. Remarkably, DUB activity was responsible for the capacity of Nsp11 to inhibit nuclear factor κB (NF-κB) activation. Mutations abrogating the DUB activity of Nsp11 toward K48-linked polyubiquitin chains of IκBα nullified the suppressive effect on NF-κB. Our data add Nsp11 to the list of DUBs encoded by PRRSV and uncover a novel mechanism by which PRRSV cripples host innate immune responses.