The envelope of Gram-negative bacteria is a complex compartment that is essential for viability. To ensure survival of the bacterial cells in fluctuating environments, several signal transduction systems, called envelope stress response systems (ESRSs), exist to monitor envelope biogenesis and homeostasis. The Cpx two-component system is an extensively studied ESRS in Escherichia coli that is active during exposure to a vast array of stresses and protects the envelope under those harmful circumstances. Overproduction of NlpE, a two-domain outer membrane lipoprotein of unclear function, has been used in numerous studies as a molecular trigger to turn on the system artificially. However, the mechanism of Cpx activation by NlpE, as well as its physiological relevance, awaited further investigation. In this paper, we provide novel insights into the role played by NlpE in the Cpx system. We found that, among all outer membrane lipoproteins in E. coli, NlpE is sufficient to induce Cpx when lipoprotein trafficking is perturbed. Under such conditions, fitness is increased by the presence of NlpE. Moreover, we show that NlpE, through its N-terminal domain, physically interacts with the Cpx sensor kinase CpxA. Our data suggest that NlpE also serves to activate the Cpx system during oxidative folding defects in the periplasm and that its C-terminal domain is involved in the sensing mechanism. Overall, our data demonstrate that NlpE acts as a sentinel for two important envelope biogenesis processes, namely, lipoprotein sorting and oxidative folding, and they further establish NlpE as a bona fide member of the Cpx two-component system.IMPORTANCE Bacteria rely on a sophisticated envelope to shield them against challenging environmental conditions and therefore need to ensure correct envelope assembly and integrity. A major signaling pathway that performs this role in Gram-negative species is the Cpx system. An outer membrane lipoprotein of unclear function, NlpE, has long been exploited as a research tool to study Cpx in E. coli, since it triggers this system when overproduced or mislocalized; however, the mechanism and physiological relevance of the NlpE-Cpx connection have awaited further investigation. We elucidate a new function for NlpE by showing that it physically interacts with the Cpx sensor CpxA and acts as a sentinel that specifically monitors two essential envelope biogenesis processes, namely, lipoprotein sorting and oxidative folding.