Calnexin, an abundant membrane protein, and its lumenal homolog calreticulin interact with nascent proteins in the endoplasmic reticulum. Because they have an affinity for monoglucosylated N‐linked oligosaccharides which can be regenerated from the aglucosylated sugar, it has been speculated that this repeated oligosaccharide binding may play a role in nascent chain folding. To investigate the process, we have developed a novel assay system using microsomes freshly prepared from pulse labeled HepG2 cells. Unlike the previously described oxidative folding systems which required rabbit reticulocyte lysates, the oxidative folding of transferrin in isolated microsomes could be carried out in a defined solution. In this system, addition of a glucose donor, UDP‐glucose, to the microsomes triggered glucosylation of transferrin and resulted in its cyclic interaction with calnexin and calreticulin. When the folding of transferrin in microsomes was analyzed, UDP‐glucose enhanced the amount of folded transferrin and reduced the disulfide‐linked aggregates. Analysis of transferrin folding in briefly heat‐treated microsomes revealed that UDP‐glucose was also effective in elimination of heat‐induced misfolding. Incubation of the microsomes with an α–glucosidase inhibitor, castanospermine, prolonged the association of transferrin with the chaperones and prevented completion of folding and, importantly, aggregate formation, particularly in the calnexin complex. Accordingly, we demonstrate that repeated binding of the chaperones to the glucose of the transferrin sugar moiety prevents and corrects misfolding of the protein.