Newly synthesized proteins that do not fold correctly in the ER are targeted for ER-associated protein degradation (ERAD) through distinct sorting mechanisms; soluble ERAD substrates require ER-Golgi transport and retrieval for degradation, whereas transmembrane ERAD substrates are retained in the ER. Retained transmembrane proteins are often sequestered into specialized ER subdomains, but the relevance of such sequestration to proteasomal degradation has not been explored. We used the yeast Saccharomyces cerevisiae and a model ERAD substrate, the cystic fibrosis transmembrane conductance regulator (CFTR), to explore whether CFTR is sequestered before degradation, to identify the molecular machinery regulating sequestration, and to analyze the relationship between sequestration and degradation. We report that CFTR is sequestered into ER subdomains containing the chaperone Kar2p, and that sequestration and CFTR degradation are disrupted in sec12ts strain (mutant in guanine-nucleotide exchange factor for Sar1p), sec13ts strain (mutant in the Sec13p component of COPII), and sec23ts strain (mutant in the Sec23p component of COPII) grown at restrictive temperature. The function of the Sar1p/COPII machinery in CFTR sequestration and degradation is independent of its role in ER-Golgi traffic. We propose that Sar1p/COPII-mediated sorting of CFTR into ER subdomains is essential for its entry into the proteasomal degradation pathway. These findings reveal a new aspect of the degradative mechanism, and suggest functional crosstalk between the secretory and the degradative pathways.