Co-activator complexes dynamically deposit post-translational modifications (PTMs) on histones, or remove them, to regulate chromatin accessibility and/or to create/erase docking surfaces for proteins that recognize histone PTMs. SAGA (Spt-Ada-Gcn5 Acetyltransferase) is an evolutionary conserved multisubunit co-activator complex with modular organization. The deubiquitylation module (DUB) of mammalian SAGA complex is composed of the ubiquitin-specific protease 22 (USP22) and three adaptor proteins, ATXN7, ATXN7L3 and ENY2, which are all needed for the full activity of the USP22 enzyme to remove monoubiquitin (ub1) from histone H2B. Two additional USP22-related ubiquitin hydrolases (called USP27X or USP51) have been described to form alternative DUBs with ATXN7L3 and ENY2, which can also deubiquitylate H2Bub1. Here we report that USP22 and ATXN7L3 are essential for normal embryonic development of mice, however their requirements are not identical during this process, as Atxn7l3 −/− embryos show developmental delay already at embryonic day (E) 7.5, while Usp22 −/− embryos are normal at this stage, but die at E14.5. Global histone H2Bub1 levels were only slightly affected in Usp22 null embryos, in contrast H2Bub1 levels were strongly increased in Atxn7l3 null embryos and derived cell lines. Our transcriptomic analyses carried out from wild type and Atxn7l3 −/− mouse embryonic stem cells (mESCs), or primary mouse embryonic fibroblasts (MEFs) suggest that the ATXN7L3-related DUB activity regulates only a subset of genes in both cell types. However, the gene sets and the extent of their deregulation were different in mESCs and MEFs. Interestingly, the strong increase of H2Bub1 levels observed in the Atxn7l3 −/− mESCs, or Atxn7l3 −/− MEFs, does not correlate with the modest changes in RNA Polymerase II (Pol II) occupancy and lack of changes in Pol II elongation observed in the two Atxn7l3 −/− cellular systems. These observations together indicate that deubiquitylation of histone H2Bub1 does not directly regulate global Pol II transcription elongation.