Interferon (IFN)-induced transmembrane protein 3 (IFITM3) is a cell-intrinsic factor that limits influenza virus infections. We previously showed that IFITM3 degradation is increased by its ubiquitination, though the ubiquitin ligase responsible for this modification remained elusive. Here, we demonstrate that the E3 ubiquitin ligase NEDD4 ubiquitinates IFITM3 in cells and in vitro. This IFITM3 ubiquitination is dependent upon the presence of a PPxY motif within IFITM3 and the WW domain-containing region of NEDD4. In NEDD4 knockout mouse embryonic fibroblasts, we observed defective IFITM3 ubiquitination and accumulation of high levels of basal IFITM3 as compared to wild type cells. Heightened IFITM3 levels significantly protected NEDD4 knockout cells from infection by influenza A and B viruses. Similarly, knockdown of NEDD4 in human lung cells resulted in an increase in steady state IFITM3 and a decrease in influenza virus infection, demonstrating a conservation of this NEDD4-dependent IFITM3 regulatory mechanism in mouse and human cells. Consistent with the known association of NEDD4 with lysosomes, we demonstrate for the first time that steady state turnover of IFITM3 occurs through the lysosomal degradation pathway. Overall, this work identifies the enzyme NEDD4 as a new therapeutic target for the prevention of influenza virus infections, and introduces a new paradigm for up-regulating cellular levels of IFITM3 independently of IFN or infection.