26S proteasomes are multisubunit protease complexes that play the central role in the ubiquitin-dependent protein degradation pathway. The proteolytically active core is formed by the 20S proteasome. Regulatory subunits, principally the 19S cap complex, confer the specificity towards ubiquitinated substrates and an ATP-dependence on proteolysis. Green fluorescence protein (GFP)-tagged versions of either an alpha-subunit of the 20S core or an ATPase subunit of the 19S cap complex were functionally incorporated into the protease complex, thus allowing to monitor the subcellular distribution of 26S proteasomes in living yeast. Our localization studies suggest that proteasomal proteolysis mainly occurs at the nuclear envelope (NE)/rough ER. Implications of proteasomal functions at the NE/rough ER are discussed in the context of published work on ER degradation and with regard to possible targeting mechanisms.