NEDDylation has been shown to participate in the DNA damage pathway, but the substrates of neural precursor cell expressed developmentally downregulated 8 (NEDD8) and the roles of NEDDylation involved in the DNA damage response (DDR) are largely unknown. Translesion synthesis (TLS) is a damage-tolerance mechanism, in which RAD18/RAD6-mediated monoubiquitinated proliferating cell nuclear antigen (PCNA) promotes recruitment of polymerase η (polη) to bypass lesions. Here we identify PCNA as a substrate of NEDD8, and show that E3 ligase RAD18-catalyzed PCNA NEDDylation antagonizes its ubiquitination. In addition, NEDP1 acts as the deNEDDylase of PCNA, and NEDP1 deletion enhances PCNA NEDDylation but reduces its ubiquitination. In response to H₂O₂ stimulation, NEDP1 disassociates from PCNA and RAD18-dependent PCNA NEDDylation increases markedly after its ubiquitination. Impairment of NEDDylation by Ubc12 knockout enhances PCNA ubiquitination and promotes PCNA-polη interaction, while up-regulation of NEDDylation by NEDD8 overexpression or NEDP1 deletion reduces the excessive accumulation of ubiquitinated PCNA, thus inhibits PCNA-polη interaction and blocks polη foci formation. Moreover, Ubc12 knockout decreases cell sensitivity to H₂O₂-induced oxidative stress, but NEDP1 deletion aggravates this sensitivity. Collectively, our study elucidates the important role of NEDDylation in the DDR as a modulator of PCNA monoubiquitination and polη recruitment.