The 26S proteasome is the primary protease responsible for degrading misfolded membrane proteins in the endoplasmic reticulum. Here we examine the specific role of β subunit function on polypeptide cleavage and membrane release of CFTR, a prototypical ER-associated degradation substrate with 12 transmembrane segments. In the presence of ATP, cytosol and fully active proteasomes, CFTR was rapidly degraded and released into the cytosol solely in the form of trichloroacetic acid (TCA)-soluble peptide fragments. Inhibition of proteasome β subunits markedly decreased CFTR degradation but surprisingly, had relatively minor effects on membrane extraction and release. As a result, large TCA-insoluble degradation intermediates derived from multiple CFTR domains accumulated in the cytosol where they remained stably bound to inhibited proteasomes. Production of TCA-insoluble fragments varied for different proteasome inhibitors and correlated inversely with the cumulative proteolytic activities of β 1 , β 2 and β 5 subunits. By contrast, ATPase inhibition decreased CFTR release but had no effect on the TCA solubility of the released fragments. Our results indicate that the physiologic balance between membrane extraction and peptide cleavage is maintained by excess proteolytic capacity of the 20S subunit. Active site inhibitors reduce this capacity, uncouple ATPase and peptidase activities, and generate cytosolic degradation intermediates by allowing the rate of unfolding to exceed the rate of polypeptide cleavage.