Loss of parkin function is linked to autosomal recessive juvenile parkinsonism. Here we show that proteotoxic stress and short C-terminal truncations induce misfolding of parkin. As a consequence, wild-type parkin was depleted from a high molecular weight complex and inactivated by aggregation. Similarly, the pathogenic parkin mutant W453Stop, characterized by a C-terminal deletion of 13 amino acids, spontaneously adopted a misfolded conformation. Mutational analysis indicated that C-terminal truncations exceeding 3 amino acids abolished formation of detergent-soluble parkin. In the cytosol scattered aggregates of misfolded parkin contained the molecular chaperone Hsp70. Moreover, increased expression of chaperones prevented aggregation of wild-type parkin and promoted folding of the W453Stop mutant. Analyzing parkin folding in vitro indicated that parkin is aggregation-prone and that its folding is dependent on chaperones. Our study demonstrates that C-terminal truncations impede parkin folding and reveal a new mechanism for inactivation of parkin.