Whereas intracellular proteolysis is essential for proper cellular function, it is a destructive process, which must be tightly regulated. In some bacteria, a Pup-proteasome system tags target proteins for degradation by a bacterial proteasome. Pup, a small modifier protein, is attached to target proteins by PafA, the sole Pup ligase, in a process termed pupylation. In mycobacteria, including Mycobacterium smegmatis and Mycobacterium tuberculosis, Pup undergoes a deamidation step by the enzyme Dop prior to its PafA-mediated attachment to a target. The catalytic mechanism of Pup deamidation is also used by Dop to perform depupylation, namely the removal of Pup from already tagged proteins. Hence, Dop appears to play contradictory roles: On the one hand, deamidation of Pup promotes pupylation, while on the other hand, depupylation reduces tagged protein levels. To avoid futile pupylation-depupylation cycles, Dop activity must be regulated. An intramolecular regulatory mechanism directs Dop to catalyze deamidation more effectively than depupylation. A complementary intermolecular mechanism results in Dop depletion under conditions where protein pupylation and degradation are favorable. In this work, we studied these regulatory mechanisms and identified a flexible loop in Dop, previously termed the Dop-loop, that acts as an intramolecular regulatory element that allosterically controls substrate preference. To investigate regulation at the intermolecular level, we used the CRISPR interference system to knock down the expression of M. smegmatis ATP-dependent intracellular proteases and found that the ClpCP protease is responsible for Dop depletion under starvation conditions. These findings clarify previous observations and introduce a new level for the regulation of Dop activity.