AbstractCells adapt to conditions that compromise protein conformational stability by activating various stress response pathways, but the mechanisms used in sensing misfolded proteins remain unclear. Moreover, aggregates of disease proteins often fail to induce a productive stress response. Here, using a yeast model of polyQ protein aggregation, we identified Sis1, an essential Hsp40 co-chaperone of Hsp70, as a critical sensor of proteotoxic stress. At elevated levels, Sis1 prevented the formation of dense polyQ inclusions and directed soluble polyQ oligomers towards the formation of permeable condensates. Hsp70 accumulated in a liquid-like state within this polyQ meshwork, resulting in a potent activation of the HSF1 dependent stress response. Sis1, and the homologous DnaJB6 in mammalian cells, also regulated the magnitude of the cellular heat stress response, suggesting a general role in sensing protein misfolding. Sis1/DnaJB6 functions as a limiting regulator to enable a dynamic stress response and avoid hypersensitivity to environmental changes.