The environmental, genetic, and/or age-related changes in proteostasis induce inflammation, oxidative stress, and apoptosis. We quantified the correlation of protein expression of critical proteostasis mediators to severity of chronic lung disease using lung tissue samples from control and chronic obstructive pulmonary disease (COPD) subjects (GOLD stage 0–IV) and cigarette smoke (CS)-induced murine model. The human bronchial epithelial cells, HEK-293, and Beas2B cells were used for in vitro experiments to verify the mechanisms. Our data verifies the correlation of higher expression of valosin-containing protein (VCP) retrograde translocation complex (VCP-Rma1-gp78) with severity of emphysema in COPD lung tissues and over-expression of inflammatory, ER stress and apoptotic mediators like NFκB, GADD-153/CHOP, and p-eIF2α. Moreover, subjects with severe emphysema had a higher accumulation of ubiquitinated proteins and deubiquitinating enzyme, UCHL-1, indicating towards the aggregation of misfolded or damaged proteins. The modulation of both protein degradation and synthesis rates by CS-extract substantiates the pathogenetic role of proteostasis-imbalance in emphysema and COPD. We identified that VCP also mediates proteasomal degradation of HDAC2 and Nrf2, as a potential mechanism for increased oxidative stress and corticosteroid resistance in COPD subjects with emphysema. Next, we confirmed that higher VCP expression associates with increased inflammation and apoptosis using in vitro and murine models. Our data clearly shows aberrant proteostasis in COPD subjects with severe emphysema. In addition, we evaluate therapeutic efficacy of salubrinal (ER stress inhibitor) to correct the proteostasis-imbalance based on its ability to control VCP expression and ubiquitin accumulation. Overall, our data demonstrate for the first time the critical role of proteostasis-imbalance in pathogenesis of severe emphysema.