Huntington's disease (HD) is caused by polyglutamine expansion in huntingtin (htt) protein, but the exact mechanism of HD pathogenesis remains uncertain. Recent evidence suggests that htt proteins with expanded polyglutamine tracts induce endoplasmic reticulum (ER) stress, probably by interfering with ER-associated degradation (ERAD). Here we report that mutant htt interacts and interferes with the function of gp78, an ER membrane-anchored ubiquitin ligase (E3) involved in ERAD. Mapping studies showed that the HEAT repeats 2&3 of htt interact with the cue domain of gp78. The interaction competitively reduces polyubiquitinated protein binding to gp78 and also sterically blocks gp78 interaction of p97/VCP, a molecular chaperone that is essential for ERAD. These effects of htt negatively regulate the function of gp78 in ERAD and are aggravated by polyglutamine expansion. Paradoxically, gp78 is still able to ubiquitinate and facilitate degradation of htt proteins with expanded polyglutamine. The impairment of ERAD by mutant htt proteins is associated with induction of ER stress. Our studies provide a novel molecular mechanism that supports the involvement of ER stress in HD pathogenesis.