Chemotherapy triggers endoplasmic reticulum (ER) stress, which in turn regulates levels of the active (LAP) and the natural dominant-negative (LIP) forms of the transcription factor C/EBP-β. LAP upregulates and LIP downregulates the multidrug resistance (MDR) protein P-glycoprotein (Pgp), but it is not known how critical is their role in establishing MDR.Cell viability was quantitated by crystal violet staining and measuring absorbance at 540nm. Expression of various proteins was determined by immunoblotting. mRNA levels were determined by quantitative reverse transcriptase polymerase chain reaction (RT-PCR). LIP and LAP were overexpressed using expression plasmids followed by selection with blasticidin. Tumor cells expressing doxycycline-inducible LIP were orthotopically implanted in mice (n = 15 mice per group), and tumor size was measured daily by caliper. Tumor sections were stained with hematoxylin and eosin and immunostained for Pgp, proliferation, and ER stress markers.MDR cells do not express basal, chemotherapy-triggered, or ER stress-triggered LIP and fail to activate the CHOP-caspase-3 death-triggering axis upon ER stress or chemotherapy challenge. Overexpression of LIP reversed the MDR phenotype in vitro and in tumors implanted in mice. LIP was undetectable in MDR cells, probably due to its ubiquitination, which was 3.56-fold higher, resulting in lysosomal and proteasomal degradation of LIP.Spontaneous and drug-selected MDR cells lack LIP, which is eliminated by ubiquitin-mediated degradation. Loss of LIP drives MDR not only by increasing Pgp expression but also by a two-fold attenuation of ER stress-triggered cell death.