Proteolysis by the ubiquitin-proteasome pathway (UPP) has emerged as a new molecular mechanism that controls wide-ranging functions in the nervous system, including fine-tuning of synaptic connections during development and synaptic plasticity in the adult organism. In the UPP, attachment of a small protein, ubiquitin, tags the substrates for degradation by a multisubunit complex called the proteasome. Linkage of ubiquitin to protein substrates is highly specific and occurs through a series of well-orchestrated enzymatic steps. The UPP regulates neurotransmitter receptors, protein kinases, synaptic proteins, transcription factors, and other molecules critical for synaptic plasticity. Accumulating evidence indicates that the operation of the UPP in neurons is not homogeneous and is subject to tightly managed local regulation in different neuronal subcompartments. Investigations on both invertebrate and vertebrate model systems have revealed local roles for enzymes that attach ubiquitin to substrate proteins, as well as for enzymes that remove ubiquitin from substrates. The proteasome also has been shown to possess disparate functions in different parts of the neuron. Here I give a broad overview of the role of the UPP in synaptic plasticity and highlight the local roles and regulation of the proteolytic pathway in neurons.