The low density lipoprotein receptor-related protein (LRP) is a multifunctional endocytic receptor with the ability to bind and endocytose several structurally and functionally distinct ligands. A 39 kDa receptor-associated protein (RAP) inhibits all ligand interactions with LRP in vitro. In the present study, we demonstrate that RAP is an endoplasmic reticulum (ER) resident protein. The tetrapepetide sequence HNEL at the C-terminus of RAP is both necessary and sufficient for RAP retention within the ER. Metabolic labeling combined with cross-linking studies show that RAP interacts with LRP in vivo. Pulse-chase analysis reveals that this association is transient early in the secretory pathway and coincides with LRP aggregation and reduced ligand binding activity. Both internal triplicated LRP binding domains on RAP and multiple RAP binding domains on LRP appear to contribute to the aggregation of LRP and RAP. Dissociation of RAP from LRP results from the lower pH encountered later in the secretory pathway and correlates with an increase in LRP ligand binding activity. Taken together, our results thus suggest that RAP functions intracellularly as a molecular chaperone for LRP and regulates its ligand binding activity along the secretory pathway.