Ubiquitination is a crucial post-translational modification involved in a wide range of cellular processes. Modification of target proteins via ubiquitin is orchestrated by an enzyme cascade, which can be reversed by deubiquitinases (DUBs). The imbalance of DUB activity is thus of great consequence to cellular homeostasis and is involved in numerous diseases. Therefore, DUBs grow into great druggable targets. We have recently reported a deubiquitylating enzyme (DUB) USP32 as a critical player in the endo-lysosomal system. SILAC-based ubiquitome profiling revealed that several GTPases, including the central organizer of late endosome biology, Rab7, are substrates of USP32. Moreover, USP32 is involved in various cancer types, and its high expression level is associated with a poor survival rate. Using high-throughput screening of a bespoke compound library synthesized in house, we have now identified a highly potent small-molecule inhibitor for this DUB, whose selectivity was probed using activity-based profiling followed by state-of-the-art proteomic analysis. We further generate a cell permeable activity-based probe derived from USP32 inhibitor to detect the activity of USP32 in vitro and in the living cell. The probe is also used as a pull-down tool to show its specificity towards USP32 by quantitative mass spectrometry. Taking advantage of our potent and selective inhibitor, we went on to perform total proteome and ubiquitome analysis comparing inhibitor-treated versus untreated cells. Cross-comparison of these datasets recapitulated the known effects of USP32 loss-of-function on small GTPases, explicitly validating the involvement of its deubiquitinating activity in the endo-lysosomal pathway. Our results provide insights into the cell biology of deubiquitination and open new avenues for exploring activity-based functions of DUBs in a temporally resolved manner. We envision that future utility of the inhibitor will not only be a tool to better understand the cellular function of USP32 but also open new therapeutic avenues.