Accumulation of misfolded proteins in the endoplasmic reticulum (ER) causes ER stress and activates inositol-requiring protein-1 (IRE1), among other ER-associated signaling proteins of the unfolded protein response (UPR) in mammalian cells. IRE1 signaling becomes attenuated under prolonged ER stress. The mechanisms by which this occurs are not well understood. An ER resident protein, Bax inhibitor-1 (BI-1), interacts with IRE1 and directly inhibits IRE1 activity. However, little is known about regulation of the BI-1 protein. We show here that bifunctional apoptosis regulator (BAR) functions as an ER-associated RING-type E3 ligase, interacts with BI-1, and promotes proteasomal degradation of BI-1. Overexpression of BAR reduced BI-1 protein levels in a RING-dependent manner. Conversely, knockdown of endogenous BAR increased BI-1 protein levels and enhanced inhibition of IRE1 signaling during ER stress. We also found that the levels of endogenous BAR were reduced under prolonged ER stress. Our findings suggest that post-translational regulation of the BI-1 protein by E3 ligase BAR contributes to the dynamic control of IRE1 signaling during ER stress.