Ubiquitin accumulation in amyloid plaques is a pathological marker observed in the vast majority of neurodegenerative diseases, yet ubiquitin function in these inclusions is controversial. It has been suggested that ubiquitylated proteins are directed to inclusion bodies under stress conditions, when both chaperone-mediated refolding and proteasomal degradation are compromised or overwhelmed. Alternatively, ubiquitin and chaperones may be recruited to preformed inclusions to promote their elimination. We address this issue us ing a yeast model system, based on expression of several mildly misfolded degradation substrates in cells with altered chaperone content. We find that the heat shock protein 70 (Hsp70) chaperone pair Ssa1/Ssa2 and the Hsp40 cochaperone Sis1 are essential for degra dation. Substrate ubiquitylation is strictly dependent on Sis1, whereas Ssa1 and Ssa2 are dispensable. Remarkably, in Ssa1/Ssa2-depleted cells, ubiquitylated substrates are seques tered into detergent-insoluble, Hsp42-positive inclusion bodies. Unexpectedly, sequestra tion is abolished by preventing substrate ubiquitylation. We conclude that Hsp40 is required for the targeting of misfolded proteins to the ubiquitylation machinery, whereas the decision to degrade or sequester ubiquitylated proteins is mediated by the Hsp70s. Accordingly, diminished Hsp70 levels, as observed in aging or certain pathological conditions, might be sufficient to trigger ubiquitin-dependent sequestration of partially misfolded proteins into inclusion bodies.