To maintain protein homeostasis in secretory compartments, eukaryotic cells harbor a quality control system that monitors protein folding and protein complex assembly in the endoplasmic reticulum (ER). Proteins that do not fold properly or integrate into cognate complexes are degraded by ER-associated degradation (ERAD) involving retrotranslocation to the cytoplasm and proteasomal peptide hydrolysis. N-linked glycans are essential in glycoprotein ERAD; the covalent oligosaccharide structure is used as a signal to display the folding status of the host protein. In this study, we define the function of the Htm1 protein as an alpha1,2-specific exomannosidase that generates the Man(7)GlcNAc(2) oligosaccharide with a terminal alpha1,6-linked mannosyl residue on degradation substrates. This oligosaccharide signal is decoded by the ER-localized lectin Yos9p that in conjunction with Hrd3p triggers the ubiquitin-proteasome-dependent hydrolysis of these glycoproteins. The Htm1p exomannosidase activity requires processing of the N-glycan by glucosidase I, glucosidase II, and mannosidase I, resulting in a sequential order of specific N-glycan structures that reflect the folding status of the glycoprotein.