Quality-control mechanisms of protein folding of transmembrane and secreted proteins is mediated by endoplasmic-reticulum-associated degradation (ERAD), which is used to detect and to degrade misfolded proteins in the ER. The ERAD machinery consists of chaperones, transmembrane proteins and ubiquitin-associated enzymes that detect, modify, and retro-translocate the misfolded proteins to the cytoplasm for degradation by the proteasome. In contrast to ERAD, little is known about the fates of integral membrane and secreted proteins that become misfolded at the plasma membrane or in the extracellular space. Derlin proteins are a family of proteins that are conserved in all eukaryotes, where they function in ERAD. Here, we show that loss of Derlin function in Caenorhabditis elegans and in mouse macrophages results in the accumulation of integral membrane proteins at the plasma membrane. Induction of LDL receptor misfolding at the plasma membrane results in a sharp decrease in its half-life, which can be rescued by proteasomal inhibitors or by reduction of Derlin-1 levels. We also show that Derlin proteins localize to endosomes as well as to the ER. Our data are consistent with a model where Derlin proteins function in a spatially segregated quality control pathway that is used for the recognition and degradation of transmembrane proteins that become misfolded at the plasma membrane and/or in endosomes.