Saccharomyces cerevisiae cells grown at 24 degrees C acquire thermotolerance and survive exposure to 50 degrees C, but only if they are first incubated at 30 degrees C, the temperature where heat shock genes are activated. We show here that the enzymatic activity of a secretory beta-lactamase fusion protein, pre-accumulated at 37 degrees C in the endoplasmic reticulum, was abolished by exposure of the cells to 50 degrees C. When the cells were returned to 24 degrees C, beta-lactamase activity was resumed. Reactivation occurred in the endoplasmic reticulum, but not in the Golgi apparatus. It was dependent on metabolic energy, but did not require de novo protein synthesis. According to co-immunoprecipitation experiments, immuno-globulin-binding protein (BiP/Kar2p) was associated with the fusion protein. We suggest that recovery from thermal insult involves, in addition to cytoplasmic and nuclear events, refolding of heat-damaged proteins in the endoplasmic reticulum by a heat-resistant machinery, which forms part of a fundamental survival mechanism.