Recognition of pathogen-associated molecular patterns by pattern recognition receptors (PRRs) activates the innate immune response. Although PRR-mediated signaling events are critical to the survival of plants and animals, secretion and localization of PRRs have not yet been clearly elucidated. Here we report the in vivo interaction of the endoplasmic reticulum (ER) chaperone BiP3 with the rice XA21 PRR, which confers resistance to the Gram negative bacterium, Xanthomonas oryzae pv. oryzae (Xoo). We show that XA21 is glycosylated and is primarily localized to the ER and also to the plasma membrane (PM). In BiP3-overexpressing rice plants, XA21-mediated immunity is compromised, XA21 stability is significantly decreased, and XA21 proteolytic cleavage is inhibited. BiP3 overexpression does not affect the general rice defense response, cell death or brassinolide-induced responses. These results indicate that BiP3 regulates XA21 protein stability and processing and that this regulation is critical for resistance to Xoo.