Overproduction of an endoplasmic reticulum (ER)‐resident membrane protein (cytochrome P450 52A3) and of a secretory protein (invertase) was used to study the regulation of the luminal ER protein Kar2p under conditions that lead to ER proliferation and secretory overload, respectively. In both cases we found (i) a significant increase of Kar2 protein and mRNA levels, (ii) a transcriptional regulation based on the function of the 22 bp unfolded‐protein‐response element of the KAR2 promoter and (iii) an essential role of the transmembrane kinase Ire1p for upregulation of KAR2 gene expression. These results show that the same mechanism operates when KAR2 induction is triggered by overproduction of cytochrome P450 or invertase and that this mechanism shares the known features of the unfolded‐protein‐response pathway. Disruption of the IRE1 gene resulted in a marked decrease of the invertase protein levels produced. In contrast, a functional IRE1 gene was not required to reach high‐level production of the integral membrane protein cytochrome P450 52A3. Moreover, IRE1 gene disruption did not prevent P450‐induced ER proliferation. We suggest that Ire1p‐mediated KAR2 induction is, in the case of cytochrome P450 52A3 overproduction, a process which follows on ER proliferation, thereby monitoring the increase of ER size and adjusting the level of Kar2p accordingly. © 1997 John Wiley & Sons, Ltd.