Eukaryotic secretory proteins cross the endoplasmic reticulum (ER) membrane through a protein-conducting channel contained within the ribosome-Sec61translocon complex (RTC). Using a zinc-finger sequence as a folding switch, we show that cotranslational folding of a secretory passenger inhibits translocation in canine ER microsomes and in human cells. Folding occurs within a cytosolically inaccessible environment, after ER targeting but before initiation of translocation, and it is most effective when the folded domain is 15-54 residues beyond the signal sequence. Under these conditions, substrate is diverted into cytosol at the stage of synthesis in which unfolded substrate enters the ER lumen. Moreover, the translocation block is reversed by passenger unfolding even after cytosol emergence. These studies identify an enclosed compartment within the assembled RTC that allows a short span of nascent chain to reversibly abort translocation in a substrate-specific manner.