Mutation of tubulin chaperone E (TBCE) underlies hypoparathyroidism, retardation, and dysmorphism (HRD) syndrome with defective microtubule (MT) cytoskeleton. TBCE/yeast Pac2 comprises CAP-Gly, LRR (leucine-rich region), and UbL (ubiquitin-like) domains. TBCE folds alpha-tubulin and promotes alpha/beta dimerization. We show that Pac2 functions in MT dynamics: the CAP-Gly domain binds alpha-tubulin and MTs, and functions in suppression of benomyl sensitivity of pac2Delta mutants. Pac2 binds proteasomes: the LRR binds Rpn1, and the UbL binds Rpn10; the latter interaction mediates Pac2 turnover. The UbL also binds the Skp1-Cdc53-F-box (SCF) ubiquitin ligase complex; these competing interactions for the UbL may impact on MT dynamics. pac2Delta mutants are sensitive to misfolded protein stress. This is suppressed by ectopic PAC2 with both the CAP-Gly and UbL domains being essential. We propose a novel role for Pac2 in the misfolded protein stress response based on its ability to interact with both the MT cytoskeleton and the proteasomes.