Degradation of proteins by the proteasome is crucial in regulating their levels in the cell. Post-translational modifications, such as ubiquitylation and Fat10ylation, trigger proteasomal degradation of the substrate proteins. While ubiquitylation regulates multiple cellular pathways, Fat10ylation functions explicitly in the inflammatory response pathway. At the proteasome, ubiquitin is recycled after being cleaved from the substrate, while Fat10 is degraded simultaneously with its substrate. Although the thermodynamic properties of the substrate are critical for effective proteasomal degradation, they remain poorly understood for the Fat10-proteasome pathway. We studied the thermodynamic properties of the Fat10 similar to substrate conjugate to uncover mechanistic details of the pathway. First, the mechanical unfolding of Fat10 similar to substrate was studied by molecular dynamics simulations, which suggested that the unfolding pathway and unfolding energy of the substrate depend on the site of Fat10 modification. We also investigated different pathways for the entry of the Fat10 similar to substrate into the proteasome core. Our analysis supports a model where the entry of Fat10, followed by the substrate, is the energetically preferred pathway. Further, we studied Fat10's effect on the thermodynamic properties of distinct substrates, considering their size, flexibility, and surface properties. The results uncovered significant entropic destabilization of substrates due to Fat10ylation, particularly in smaller substrates. For larger substrates, multi-monoFat10ylation is necessary to induce destabilization. Our study further reveals that Fat10 modification at negative patches on substrate surfaces is essential for optimal destabilization and subsequent degradation. These findings provide atomistic insights into the degradation mechanisms in the Fat10 proteasome pathway with potential implications for therapeutic interventions.