The cytoplasm is protected against the perils of protein misfolding by two mechanisms: molecular chaperones (which facilitate proper folding) and the ubiquitin-proteasome system, which regulates degradation of misfolded proteins. CHIP (carboxyl terminus of Hsp70-interacting protein) is an Hsp70-associated ubiquitin ligase that participates in this process by ubiquitylating misfolded proteins associated with cytoplasmic chaperones. Mechanisms that regulate the activity of CHIP are, at present, poorly understood. Using a proteomics approach, we have identified BAG2, a previously uncharacterized BAG domain-containing protein, as a common component of CHIP holocomplexes in vivo. Binding assays indicate that BAG2 associates with CHIP as part of a ternary complex with Hsc70, and BAG2 colocalizes with CHIP under both quiescent conditions and after heat shock. In vitro and in vivo ubiquitylation assays indicate that BAG2 is an efficient and specific inhibitor of CHIP-dependent ubiquitin ligase activity. This activity is due, in part, to inhibition of interactions between CHIP and its cognate ubiquitin-conjugating enzyme, UbcH5a, which may in turn be facilitated by ATP-dependent remodeling of the BAG2-Hsc70-CHIP heterocomplex. The association of BAG2 with CHIP provides a cochaperone-dependent regulatory mechanism for preventing unregulated ubiquitylation of misfolded proteins by CHIP.Cell viability is constantly threatened by protein misfolding within the cytoplasm due to imprecise de novo protein folding and the consequences of oxidative and thermal stresses and conformational chain reaction events that affect protein structure. Because of the cellular inefficiencies and toxicities associated with off-pathway protein conformations, tightly regulated systems have evolved to minimize protein misfolding. The molecular chaperones constitute one component of the cytoplasmic protein quality control process. These proteins (including Hsp70, Hsp90, TRiC, and other associated proteins) assist in cotranslational folding, maintain metastable protein conformations, and repair proteins that are structurally defective. The molecular regulation and coordination of cytoplasmic folding and refolding are becoming increasingly clear (1).In addition to promoting proper folding, a second requirement of protein quality control mechanisms is the efficient removal of proteins that are irreversibly damaged or extremely toxic. Degradation of misfolded proteins occurs predominantly through the ubiquitin-proteasome system. For proteins that are misfolded within the endoplasmic reticulum, the protein degradation pathways are well described (2). Less is known about degradation of misfolded proteins within the cytoplasm. Recently, the co-chaperone/ubiquitin ligase CHIP (carboxyl terminus of Hsp70-interacting protein) has been implicated in the degradation of a variety of chaperone-bound cytoplasmic proteins (3, 4). CHIP inhibits the ATPase activity of Hsp70 (5) and has U box-dependent ubiquitin ligaseactivitythattargetsarangeofchaperonesubstratesforp...