We show that ATE1-encoded Arg-transfer RNA transferase (R-transferase) of the N-end rule pathway mediates N-terminal arginylation of multiple endoplasmic reticulum (ER)-residing chaperones, leading to their cytosolic relocalization and turnover. N-terminal arginylation of BiP (also known as GRP78), protein disulphide isomerase and calreticulin is co-induced with autophagy during innate immune responses to cytosolic foreign DNA or proteasomal inhibition, associated with increased ubiquitylation. Arginylated BiP (R-BiP) is induced by and associated with cytosolic misfolded proteins destined for p62 (also known as sequestosome 1, SQSTM1) bodies. R-BiP binds the autophagic adaptor p62 through the interaction of its N-terminal arginine with the p62 ZZ domain. This allosterically induces self-oligomerization and aggregation of p62 and increases p62 interaction with LC3, leading to p62 targeting to autophagosomes and selective lysosomal co-degradation of R-BiP and p62 together with associated cargoes. In this autophagic mechanism, Nt-arginine functions as a delivery determinant, a degron and an activating ligand. Bioinformatics analysis predicts that many ER residents use arginylation to regulate non-ER processes.