The post-translational modifier ubiquitin is generated exclusively by proteolytic cleavage of precursor proteins. In Saccharomyces cerevisiae, cleavage of the linear precursor proteins releases ubiquitin and the C-terminally fused ribosomal proteins Rpl40 (Ubi1/2 precursor) and Rps31 (Ubi3 precursor), which are part of mature 60S and 40S ribosomal subunits respectively. In this study, we analysed the effects of ubi3 mutations that interfere with cleavage of the ubiquitin-Rps31 fusion protein. Strikingly, the lethal ubi3+P77 mutation, which abolished cleavage almost completely, led to a rapid G1 cell cycle arrest upon genetic depletion of wild-type UBI3. Under these conditions, the otherwise unstable Ubi3+P77 protein was efficiently assembled into translation-competent 40S ribosomal subunits. In contrast to the cleavage-affecting mutations, deletion of the ubiquitin moiety from UBI3 led to a decrease in 40S ribosomal subunits and to the incorporation of the 20S pre-rRNA into polyribosomes. Altogether, our findings provide additional evidence that the initial presence of the ubiquitin moiety of Ubi3 contributes to the efficient production of 40S ribosomal subunits and they suggest that ubiquitin release is a prerequisite for their functional integrity.