To maintain quality control in cells, mechanisms distinguish among improper
ly folded peptides, mature and functional proteins, and proteins to be targ
eted for degradation. The molecular chaperones, including heat-shock protei
n Hsp90, have the ability to recognize misfolded proteins and assist in the
ir conversion to a functional conformation. Disruption of Hsp90 heterocompl
exes by the Hsp90 inhibitor geldanamycin leads to substrate degradation thr
ough the ubiquitin-proteasome pathway(1-3), implicating this system in prot
ein triage decisions. We previously identified CHIP (carboxyl terminus of H
sc70-interacting protein) to be an interaction partner of Hsc70 (ref. 4). C
HIP also interacts directly with a tetratricopeptide repeat acceptor site o
f Hsp90, incorporating into Hsp90 heterocomplexes and eliciting release of
the regulatory cofactor p23. Here we show that CHIP abolishes the steroid-b
inding activity and transactivation potential of the glucocorticoid recepto
r, a well-characterized Hsp90 substrate(5), even though it has little effec
t on its synthesis. Instead, CHIP induces ubiquitylation of the glucocortic
oid receptor and degradation through the proteasome. By remodelling Hsp90 h
eterocomplexes to favour substrate degradation, CHIP modulates protein tria
ge decisions that regulate the balance between protein folding and degradat
ion for chaperone substrates.