In eukaryotic cells, accumulation of unfolded proteins in the endoplasmic reticulum (ER) results in a transcriptional induction of a number of ER chaperone proteins. In Saccharomyces cerevisiae, the putative transmembrane receptor kinase, Ire1p (Ern1p), has been implicated as the sensor of unfolded proteins in the ER that initiates transmittance of the unfolded protein signal from the ER to the nucleus. We have shown that the cytoplasmic domain of Ire1p receptor indeed has intrinsic Ser/Thr kinase activity and contains Ser/Thr phosphorylation sites as well. The cytoplasmic domain is also shown to form oligomers in vivo and in vitro. The ability to form oligomers primarily resides within the last 130 amino acids of the cytoplasmic domain, a region that is dispensable for in vitro kinase activity of the receptor. Oligomerization of the cytoplasmic domains is required for receptor trans-phosphorylation and subsequent activation of the kinase function. The activated kinase may transmit the unfolded protein signal from the ER to the nucleus to activate the transcription of the chaperone genes in the nucleus.