In mammals, the response to nephrotoxicant-induced renal injury is limited to repair of the proximal tubule by surviving epithelial cells. In contrast, bony fish are capable of both repair, and de novo production of nephrons in response to renal damage. Importantly, toxicant-induced nephron neogenesis in goldfish (Carassius auratus) parallels nephron development in the mammalian embryo, providing a vertebrate model for kidney development. We utilized this model system to identify genes induced by the renal toxicant, gentamicin, that may function in nephron neogenesis. A novel ubiquitin-like (UBL) gene, 40.1, was identified by differential display analysis of control and gentamicin-treated goldfish kidney. 40.1 was induced dramatically 3-7 days following a sublethal dose of gentamicin, and returned to basal level by 14 days post-treatment. The induction of 40.1 coincided with early renal injury in the proximal tubules of gentamicin-injected fish; however, expression was not restricted to the kidney, suggesting that 40.1 induction may be a more general response to cell injury. Sequence analysis revealed that 40.1 contains tandem UBL domains, and shares homology with ISG15, a 15 kD interferon-(IFN) stimulated UBL found in mammals. Analysis of the genome database for the pufferfish, Fugu rubrides, identified a goldfish ISG15 (gfISG15) homologue with an IFN-stimulated response element in the promoter region, providing further evidence that gfISG15 is the true teleost ISG15 orthologue. Zebrafish and catfish ISG15 genes were subsequently identified by sequence analysis. Consistent with its predicted function as a UBL, gfISG15 formed conjugates with cellular proteins in vitro and in transient transfections. Similar to the induction of mammalian ISG15 by microbial challenge, gfISG15 was induced in the spleen of mycobacteria-infected fish. These studies identified the first teleost ISG15 orthologue. The induction of gfISG15 as an early genetic event in response to a renal toxicant, and its conserved, stress-associated, expression in higher vertebrates suggests that ISG15 is an important component of the host response to diverse stress stimuli.