Several biochemical reactions and processes of cell biology are compartmentalized in the endoplasmic reticulum (ER). The view that the ER membrane is basically a scaffold for ER proteins, which is permeable to small molecules, is inconsistent with recent findings. The luminal micro-environment is characteristically different from the cytosol; its protein and glutathione thiols are remarkably more oxidized, and it contains a separate pyridine nucleotide pool. The substrate specificity and activity of certain luminal enzymes are dependent on selective transport of possible substrates and co-factors from the cytosol. Abundant biochemical, pharmacological, clinical and genetic data indicate that the barrier function of the lipid bilayer and specific transport activities in the membrane make the ER a separate metabolic compartment.