The cytoplasm is protected against the perils of protein misfolding by two mechanisms: molecular chaperones (which facilitate proper folding) and the ubiquitin-proteasome system, which regulates degradation of misfolded proteins. CHIP (carboxyl terminus of Hsp70-interacting protein) is an Hsp70-associated ubiquitin ligase that participates in this process by ubiquitylating misfolded proteins associated with cytoplasmic chaperones. Mechanisms that regulate the activity of CHIP are, at present, poorly understood. Using a proteomics approach, we have identified BAG2, a previously uncharacterized BAG domain-containing protein, as a common component of CHIP holocomplexes in vivo. Binding assays indicate that BAG2 associates with CHIP as part of a ternary complex with Hsc70, and BAG2 colocalizes with CHIP under both quiescent conditions and after heat shock. In vitro and in vivo ubiquitylation assays indicate that BAG2 is an efficient and specific inhibitor of CHIP-dependent ubiquitin ligase activity. This activity is due, in part, to inhibition of interactions between CHIP and its cognate ubiquitin-conjugating enzyme, UbcH5a, which may in turn be facilitated by ATP-dependent remodeling of the BAG2-Hsc70-CHIP heterocomplex. The association of BAG2 with CHIP provides a cochaperone-dependent regulatory mechanism for preventing unregulated ubiquitylation of misfolded proteins by CHIP.