Proteasome is a large proteolytic complex that consists of a 20S core particle (20SP) and 19S regulatory particle (19SP) in eukaryotes. The proteasome degrades most cellular proteins, thereby controlling many key processes, including gene expression and protein quality control. Proteasome dysfunction in plants leads to abnormal development and reduced adaptability to environmental stresses. Previous studies have shown that proteasome dysfunction upregulates the gene expression of proteasome subunits, which is known as the proteasome bounce-back response. However, the proteasome bounce-back response cannot explain the damaging effect of proteasome dysfunction on plant growth and stress adaptation. To address this question, we focused on downregulated genes caused by proteasome dysfunction. We first confirmed that the 20SP subunit PBE is an essential proteasome subunit in Arabidopsis and that PBE1 mutation impaired the function of the proteasome. Transcriptome analyses showed that hypoxia-responsive genes were greatly enriched in the downregulated genes in pbe1 mutants. Furthermore, we found that the pbe1 mutant is hypersensitive to waterlogging stress, a typical hypoxic condition, and hypoxia-related developments are impaired in the pbe1 mutant. Meanwhile, the 19SP subunit rpn1a mutant seedlings are also hypersensitive to waterlogging stress. In summary, our results suggested that proteasome dysfunction downregulated the hypoxia-responsive pathway and impaired plant growth and adaptability to hypoxia stress.