The cancer-specific fusion oncoprotein SS18-SSX1 disturbs chromatin accessibility by hijacking the BAF complex from the promoters and enhancers to the Polycomb-repressed chromatin regions. This process relies on the selective recognition of H2AK119Ub nucleosomes by synovial sarcoma X breakpoint 1 (SSX1). However, the mechanism underlying the selective recognition of H2AK119Ub nucleosomes by SSX1 in the absence of ubiquitin (Ub)-binding capacity remains unknown. Here we report the cryo-EM structure of SSX1 bound to H2AK119Ub nucleosomes at 3.1-Å resolution. Combined in vitro biochemical and cellular assays revealed that the Ub recognition by SSX1 is unique and depends on a cryptic basic groove formed by H3 and the Ub motif on the H2AK119 site. Moreover, this unorthodox binding mode of SSX1 induces DNA unwrapping at the entry/exit sites. Together, our results describe a unique mode of site-specific ubiquitinated nucleosome recognition that underlies the specific hijacking of the BAF complex to Polycomb regions by SS18-SSX1 in synovial sarcoma.