Proteins requiring post-translational modifications such as N-linked glycosylation are processed in the endoplasmic reticulum (ER). A diverse array of cellular stresses can lead to dysfunction of the ER and ultimately to an imbalance between protein-folding capacity and protein-folding load. Cells monitor protein folding by an inbuilt quality control system involving both the ER and the Golgi apparatus. Unfolded or misfolded proteins are tagged for degradation via ER-associated degradation (ERAD) or sent back through the folding cycle. Continued accumulation of incorrectly folded proteins can also trigger the unfolded protein response (UPR). In mammalian cells, UPR is a complex signaling program mediated by three ER transmembrane receptors: activating transcription factor 6 (ATF6), inositol requiring kinase 1 (IRE1) and double-stranded RNA-activated protein kinase (PKR)-like endoplasmic reticulum kinase (PERK). UPR performs three functions, adaptation, alarm, and apoptosis. During adaptation, the UPR tries to reestablish folding homeostasis by inducing the expression of chaperones that enhance protein folding. Simultaneously, global translation is attenuated to reduce the ER folding load while the degradation rate of unfolded proteins is increased. If these steps fail, the UPR induces a cellular alarm and mitochondrial mediated apoptosis program. UPR malfunctions have been associated with a wide range of disease states including tumor progression, diabetes, as well as immune and inflammatory disorders. This review describes recent advances in understanding the molecular structure of UPR in mammalian cells, its functional role in cellular stress, and its pathophysiology. Biotechnol. Bioeng. 2011;108: 2777–2793. © 2011 Wiley Periodicals, Inc.