BRICHOS is a domain found in several proteins consisting of ∼ 100 amino acids with sequence and structural similarities. Mutations in BRICHOS domain have been associated with both degenerative and proliferative diseases in several nonpulmonary organs, although the pathogenic mechanisms are largely undefined. Recently, several mutations in surfactant protein C (SP-C) mapping to the BRICHOS domain located within the proprotein (proSP-C) have been linked to interstitial lung diseases. In vitro expression of one of these BRICHOS mutants, the exon 4 deletion (hSP-C^Δexon4), promotes a dominant-negative perinuclear aggregation of the protein. The present study characterizes the trafficking behavior and pathogenic consequences resulting from hSP-C^Δexon4 expression. Time-lapse and co-localization microscopy studies demonstrated enhanced green fluorescent protein (EGFP)/hSP-C^Δexon4 expression in calnexin-positive (endoplasmic reticulum [ER]) compartment with subsequent time- and concentration-dependent development of ubiquitinated perinuclear inclusion bodies followed by apoptosis. Compared with controls, EGFP/hSP-C^Δexon4 promoted upregulation of multiple ER stress species, activated caspase 3, and induced annexin V binding. Furthermore, in GFP-u cells, hSP-C^Δexon4 directly inhibited proteasome activity. These results support a model whereby proSP-C BRICHOS mutations induce a dynamic toxic gain-of-function, causing apoptotic cell death both by early ER accumulation leading to an exaggerated unfolded protein response and by enhanced deposition of cellular aggregates associated with proteasome dysfunction.