Protein quality control is a balance between chaperone-assisted folding and removal of misfolded proteins from the endoplasmic reticulum (ER). Cell-based assays have been used to identify key players of the dislocation machinery, including members of the Derlin family. We generated conditional knockout mice to examine the in vivo role of Derlin-2, a component that nucleates cellular dislocation machinery. In most Derlin-2-deficient tissues, we found constitutive upregulation of ER chaperones and IRE-1-mediated induction of the unfolded protein response. The IRE-1/XBP-1 pathway is required for development of highly secretory cells, particularly plasma cells and hepatocytes. However, B lymphocyte development and antibody secretion were normal in the absence of Derlin-2. Likewise, hepatocyte function was unaffected by liver-specific deletion of Derlin-2. Whole-body deletion of Derlin-2 results in perinatal death. The few mice that survived to adulthood all developed skeletal dysplasia, likely caused by defects in collagen matrix protein secretion by costal chondrocytes.