The unfolded protein response (UPR) is a transcriptional and translational intracellular signaling pathway activated by the accumulation of unfolded proteins in the lumen of the endoplasmic reticulum (ER). We have used C. elegans as a genetic model system to dissect UPR signaling in a multicellular organism. C. elegans requires ire-l-mediated splicing of xbp-1 mRNA for UPR gene transcription and survival upon ER stress. In addition, ire-1/xbp-1 acts with pek-1, a protein kinase that mediates translation attenuation, in complementary pathways that are essential for worm development and survival. We propose that UPR transcriptional activation by ire-1 as well as translational attenuation by pek-1 maintain ER homeostasis. The results demonstrate that the UPR and ER homeostasis are essential for metazoan development.