Folding catalysts of the endoplasmic reticulum (ER), such as protein disulfide isomerase (PDI), accelerate the slow chemical steps, such as disulfide bond formation, that accompany protein folding. Molecular chaperones of the ER, notably the heavy chain-binding protein, BiP (grp78), bind and release unfolded proteins in an ATP-dependent fashion. In vitro, the fate of reduced, denatured lysozyme is dependent on whether the substrate interacts first with BiP or PDI. Depending on the ratio of PDI to substrate and order in which the components of the reaction are mixed, PDI can exhibit a foldase/chaperone activity, which increases the rate and extent of lysozyme refolding, or it can function as an anti-chaperone that promotes the formation of inactive, disulfide-linked lysozyme aggregates (Puig, A., and Gilbert, H.F. (1994) J. Biol. Chem. 269, 7764-7771). Reduced, denatured lysozyme, but not the native protein, interacts with BiP and efficiently stimulates its peptide-dependent ATPase activity. When present at substoichiometric amounts, BiP, like PDI, facilitates the formation of large, inactive lysozyme aggregates that are non-covalently associated with BiP. BiP and PDI compete for a limited number of sites in these insoluble aggregates. If BiP is present at a high molar excess, the chaperone binds unfolded lysozyme and inhibits its aggregation by maintaining it in a soluble, yet inactive, conformation, both in the presence or absence of ATP. Increasing concentrations of BiP decrease the extent, but not the initial rate, of refolding, suggesting that BiP and PDI compete for unfolded lysozyme and that the BiP-lysozyme complex is not a very good substrate for PDI either in the presence or absence of ATP. Depending on the BiP and PDI concentrations, unfolded lysozyme may either be efficiently refolded into the native conformation in a PDI-catalyzed reaction, or it may form both soluble and insoluble BiP-lysozyme complexes. In vitro, PDI- and BiP-facilitated aggregation, as well as the competition of the two proteins for substrate, reproduces many of the features of the quality control system of the ER.