Improperly processed secretory proteins are degraded by a hydrolytic system that is associated with the endoplasmic reticulum (ER) and appears to involve re-export of lumenal proteins into the cytoplasm for ultimate degradation by the proteasome. The chimaeric protein hGHDAF28, which contains a crippled glycosylphosphatidylinositol (GPI) C-terminal signal peptide, is degraded by a pathway highly similar to that for other ER-retained proteins and is characterized by formation of disulphide-linked aggregates, failure to reach the Golgi complex and intracellular degradation with a half life of approximately 2 h. Here we show that N-acetyl-leucinal-leucinal-norleucinal, MG-132 and lactacystin, all inhibitors of the proteasome, protect hGHDAF28; hGHDAF28 is still proteolytically cleaved in the presence of lactacystin or MG-132, by the removal of approximately 2 kDa, but the truncated fragment is not processed further. We demonstrate that the ubiquitination system accelerates ER-degradation of hGHDAF28, but is not essential to the process. Overall, these findings indicate that GPI quality control is mediated by the cytoplasmic proteasome. We also show that the presence of a cysteine residue in the GPI signal of hGHDAF28 is required for retention and degradation, as mutation of this residue to serine results in secretion of the fusion protein, implicating thiol-mediated retention as a mechanism for quality control of some GPI signals. Removal of the cysteine also prevents inclusion of hGHDAF28 in disulphide-linked aggregates, indicating that aggregate formation is an additional retention mechanism for this class of protein. Therefore our data suggest that an unpaired terminal cysteine is the retention motif of the hGHDAF28 GPI-processing signal and that additional information may be required for efficient engagement of ER quality control systems by the majority of GPI signals which lack cysteine residues.