Small heat shock proteins (sHsps) are ubiquitous molecular chaperones that prevent the unspecific aggregation of proteins. So far, Hsp26 was the only unambiguously identified member of the sHsp family in Saccharomyces cerevisiae. We show here that the sHsp system in the cytosol of S. cerevisiae consists of two proteins, Hsp26 and Hsp42. Hsp42 forms large dynamic oligomers with a barrel-like structure. In contrast to Hsp26, which functions predominantly at heat shock temperatures, Hsp42 is active as a chaperone under all conditions tested in vivo and in vitro. Under heat shock conditions, both Hsp42 and Hsp26 suppress the aggregation of one-third of the cytosolic proteins. This subset is about 90% overlapping for Hsp42 and Hsp26. The sHsp substrates belong to different biochemical pathways. This indicates a general protective function of sHsps for proteome stability in S. cerevisiae. Consistent with this observation, sHsp knockout strains show phenotypical defects. Taken together, our results define Hsp42 as an important player for protein homeostasis at physiological and under stress conditions.