Layers of quality control ensure proper protein folding and complex formation prior to exit from the endoplasmic reticulum. The fission yeast Dsc E3 ligase is a Golgi-localized complex required for sterol regulatory element-binding protein (SREBP) transcription factor activation that shows architectural similarity to endoplasmic reticulum-associated degradation E3 ligases. The Dsc E3 ligase consists of five integral membrane proteins (Dsc1-Dsc5) and functionally interacts with the conserved AAA-ATPase Cdc48. Utilizing an in vitro ubiquitination assay, we demonstrated that Dsc1 has ubiquitin E3 ligase activity that requires the E2 ubiquitin-conjugating enzyme Ubc4. Mutations that specifically block Dsc1-Ubc4 interaction prevent SREBP cleavage, indicating that SREBP activation requires Dsc E3 ligase activity. Surprisingly, Golgi localization of the Dsc E3 ligase complex also requires Dsc1 E3 ligase activity. Analysis of Dsc E3 ligase complex formation, glycosylation, and localization indicated that Dsc1 E3 ligase activity is specifically required for endoplasmic reticulum exit of the complex. These results define enzyme activity-dependent sorting as an autoregulatory mechanism for protein trafficking. 