PBN1 was identified as a gene required for production of protease B (PrB) activity in Saccharomyces cerevisiae. PBN1 encodes an endoplasmic reticulum (ER)-localized, type I membrane glycoprotein and is essential for cell viability. To study the essential function(s) of Pbn1p, we constructed a strain with PBN1 under control of the GAL promoter. Depletion of Pbn1p in this strain abrogates processing of the ER precursor forms of PrB, Gas1p, and Pho8p. Depletion of Pbn1p does not affect exit of proprotease A or procarboxypeptidase Y from the ER, indicating that Pbn1p is not required for global exit from the ER. Depleting Pbn1p leads to a significant increase in the unfolded protein response pathway, accompanied by an expansion of bulk ER membrane, indicating that there is a defect in protein folding in the ER. pbn1-1, a nonlethal allele of PBN1, displays synthetic lethality with the ero1-1 allele (ERO1 is required for oxidation in the ER) and synthetic growth defects with the cne1Delta allele (CNE1 encodes calnexin). ER-associated degradation of a lumenal substrate, CPY*, is blocked in the absence of Pbn1p. These results suggest that Pbn1p is required for proper folding and/or the stability of a subset of proteins in the ER. Thus, Pbn1p is an essential chaperone-like protein in the ER of yeast.