Impaired secretion of the hydrophobic CY028 cutinase invokes an unfolded protein response (UPR) in Saccharomyces cerevisiae cells. Here we show that the UPR in CY028-expressing S. cerevisiae cells is manifested as an aberrant morphology of the endoplasmic reticulum (ER) and as extensive membrane proliferation compared to the ER morphology and membrane proliferation of wild-type CY000-producing S. cerevisiae cells. In addition, we observed oxidative stress, which resulted in a 21-fold increase in carbonylated proteins in the CY028-producing S. cerevisiae cells. Moreover, CY028-producing S. cerevisiae cells use proteasomal degradation to reduce the amount of accumulated CY028 cutinase, thereby attenuating the stress invoked by CY028 cutinase expression. This proteasomal degradation occurs within minutes and is characteristic of ER-associated degradation (ERAD). Our results clearly show that impaired secretion of the heterologous, hydrophobic CY028 cutinase in S. cerevisiae cells leads to protein aggregation in the ER, aberrant ER morphology and proliferation, and oxidative stress, as well as a UPR and ERAD.