BiP/GRP78 is a lumenal stress protein of the endoplasmic reticulum (ER) that interacts with polypeptide folding intermediates transiting the secretory compartment. We have studied the secretion and the stress response in Chinese hamster ovary (CHO) cells that overexpress either wild-type immunoglobulin binding protein (BiP) or a BiP deletion molecule (residues 175-201) that can bind peptides and ATP but is defective in ATP hydrolysis and concomitant peptide release. Overexpressed wild-type BiP was localized to the ER and unique vesicles within the nucleus, whereas overexpressed ATPase-defective BiP was localized to the ER and cytoplasmic vesicles but was absent from the nucleus. Compared with wild-type CHO cells, overexpression of ATPase-defective BiP prevented secretion of factor VIII, a coagulation factor that extensively binds BiP in the lumen of the ER. Under these conditions factor VIII was stably associated with the ATPase-defective BiP. In contrast, the secretion of monocyte/macrophage colony stimulating factor, a protein that is not detected in association with BiP, was not affected by overexpression of ATPase-defective BiP. These results show that BiP function is not required for secretion of some proteins and suggest that some proteins do not interact with BiP upon transport through the ER. The presence of unfolded protein in the ER induces transcription of BiP and also elicits a general inhibition of protein synthesis. Overexpression of wild-type BiP prevented the stress-mediated transcriptional induction of BiP in response to either calcium ionophore A23187 treatment or tunicamycin treatment. In contrast, overexpression of ATPase-defective BiP did not prevent the stress induction of BiP, showing that the ATPase activity is required to inhibit transcriptional induction. Overexpression of wild-type BiP, but not ATPase-defective BiP, increased survival of cells treated with A23187. The increased survival mediated by overexpressed wild-type BiP correlated with reduced translation inhibition in response to the stress condition. These results indicate that overexpressed BiP alleviated the stress in the ER to prevent BiP transcriptional induction and permit continued translation of cellular mRNAs.