Conjugation of ubiquitin (Ub) to numerous substrate proteins regulates virtually all cellular processes. Eight distinct ubiquitin polymer linkages specifying different functional outcomes are generated in cells. However, the roles of some atypical poly-ubiquitin topologies, in particular linkages via lysine 27 (K27), remain poorly understood due to a lack of tools for their specific detection and manipulation. Here, we adapted a cell-based ubiquitin replacement strategy to enable selective and conditional abrogation of K27-linked ubiquitylation, revealing that this ubiquitin linkage type is essential for proliferation of human cells. We demonstrate that K27-linked ubiquitylation is predominantly a nuclear modification whose ablation deregulates nuclear ubiquitylation dynamics and impairs cell cycle progression in an epistatic manner with inactivation of the ATPase p97/VCP. Moreover, we show that a p97-proteasome pathway model substrate (Ub(G76V)-GFP) is directly modified by K27-linked ubiquitylation, and that disabling the formation of K27-linked ubiquitin signals or blocking their decoding via overexpression of the K27 linkage-specific binder UCHL3 impedes Ub(G76V)-GFP turnover at the level of p97 function. Our findings suggest a critical role of K27-linked ubiquitylation in supporting cell fitness by facilitating p97-dependent processing of ubiquitylated nuclear proteins.