In actively translating 80S ribosomes the ribosomal protein eS7 of the 40S subunit is monoubiquitinated by the E3 ligase Not4 and deubiquitinated by Otu2 upon ribosomal subunit recycling. Despite its importance for translation efficiency the exact role and structural basis for this translational reset is poorly understood. Here, structural analysis by cryo-electron microscopy of native and reconstituted Otu2-bound ribosomal complexes reveals that Otu2 engages 40S subunits mainly between ribosome recycling and initiation stages. Otu2 binds to several sites on the intersubunit surface of the 40S that are not occupied by any other 40S-binding factors. This binding mode explains the discrimination against 80S ribosomes via the largely helical N-terminal domain of Otu2 as well as the specificity for mono-ubiquitinated eS7 on 40S. Collectively, this study reveals mechanistic insights into the Otu2-driven deubiquitination steps for translational reset during ribosome recycling/(re)initiation.