ATXN3 is a ubiquitin hydrolase (or deubiquitinase, DUB), product of the ATXN3 gene, ubiquitously expressed in various cell types including peripheral and neuronal tissues and involved in several cellular pathways. Importantly, the expansion of the CAG trinucleotides within the ATXN3 gene leads to an expanded polyglutamine domain in the encoded protein, which has been associated with the onset of the spinocerebellar ataxia type 3, also known as Machado–Joseph disease, the most common dominantly inherited ataxia worldwide. ATXN3 has therefore been under intensive investigation for decades. In this review, we summarize the main functions of ATXN3 in proteostasis, DNA repair and transcriptional regulation, as well as the emerging role in regulating chromatin structure. The mentioned molecular functions of ATXN3 are also reviewed in the context of the pathological expanded form of ATXN3.