Proteins are the molecular workhorses of living systems, carrying out virtually all cellular processes. Understanding their behavior in cell-like environments is essential for elucidating their biological functions. Our laboratory investigates the biophysical properties of ubiquitin and ubiquitin-like proteins using a combination of ensemble spectroscopic techniques and single-molecule force spectroscopy. Molecular crowding, a defining feature of the cellular milieu, can profoundly influence protein stability, interactions, and phase behavior. In this talk, I will present our recent work on the liquid–liquid phase separation (LLPS) of folded ubiquitin-like proteins, demonstrating that molecular crowding can drive phase separation and that protein sequence homology plays a critical role in this process. I will also discuss how post-translational modifications regulate protein stability. Our studies reveal that ubiquitylation modulates the thermodynamic and mechanical stability of target proteins in a structure-dependent manner, whereas SUMOylation can exert distinct, and in some cases orthogonal, effects on the same protein. Together, these findings provide new insights into how molecular crowding and post-translational modifications shape protein behavior and function in the cellular environment.