The structure of many proteins entering the secretory pathway is dependent on stabilization by disulfide bonds. To support disulfide-linked folding, the endoplasmic reticulum (ER) must maintain a strongly oxidizing environment compared to the highly reduced environment of the cytosol. We report here the identification and characterization of Ero1p, a novel and essential ER-resident protein. Mutations in Ero1p cause extreme sensitivity to the reducing agent DTT, whereas overexpression confers DTT resistance. Strikingly, compromised Ero1p function results in ER retention of disulfide-stabilized proteins in a reduced, nonnative form, while not affecting structural maturation of a disulfide-free protein. We conclude that there exists a specific cellular redox machinery required for disulfide-linked protein folding in the ER and that Ero1p is an essential component of this machinery.