Cyclosporine, a widely used immunosuppressant in organ transplantation and in treatment of various autoimmune diseases, activates the unfolded protein response (UPR), an ER stress coping response. In this study we discovered a new and unanticipated cyclosporine-dependent signaling pathway, with cyclosporine triggering direct activation of the UPR. COX-2 binds to and activates IRE1α, leading to IRE1α splicing of XBP1 mRNA. Molecular interaction and modeling analyses identified a novel interaction site for cyclosporine with COX-2 which caused enhancement of COX-2 enzymatic activity required for activation of the IRE1α branch of the UPR. Cyclosporine-dependent activation of COX-2 and IRE1α in mice indicated that cyclosporine-COX-2-IRE1α signaling pathway was functional in vivo. These findings identify COX-2 as a new IRE1α binding partner and regulator of the IRE1α branch of the UPR pathway, and establishes the mechanism underlying cytotoxicity associated with chronic cyclosporine exposure.