Secretion of proteins is initiated by their uptake into the endoplasmic reticulum (ER), which possesses a proteolytic system able to degrade misfolded and nonassembled proteins. The ER degradation system was studied with yeast mutants defective in the breakdown of a mutated soluble vacuolar protein, carboxypeptidase yscY (CPYstar). The ubiquitin-conjugating enzyme Ubc7p participated in the degradation process, which was mediated by tile cytosolic 26S proteasome. It is likely that CPYstar entered the ER, was glycosylated, and was then transported back out of the ER lumen to the cytoplasmic side of the organelle, where it was conjugated with ubiquitin and degraded.