USP7 (Ubiquitin Specific processing Protease-7) is a deubiquitinase which, over the past decade emerged as a critical regulator of cellular processes. Deregulation of USP7 activity has been linked to cancer, making USP7 inhibition an appealing anti-cancer strategy. The identification of novel USP7 substrates and additional USP7-dependent cellular activities will broaden our knowledge towards potential clinical application of USP7 inhibitors. Results presented in this study uncover a novel and pivotal function of USP7 in the maintenance of genomic stability. Upon USP7 depletion we observed prolonged mitosis and mitotic abnormalities including micronuclei accumulation, lagging chromosomes and karyotype instability. Inhibition of USP7 with small molecule inhibitors stabilizes cyclin B and causes mitotic abnormalities. Our results suggest that these USP7-dependent effects are mediated by decreased levels of spindle assembly checkpoint (SAC) component Bub3, which we characterized as an interacting partner and substrate of USP7. In silico analysis across the NCI-60 panels of cell lines supports our results where lower levels of USP7 strongly correlate with genomic instability. In conclusion, we identified a novel role of USP7 as regulator of the SAC component Bub3 and genomic stability.