GRP78, a molecular chaperone primarily located in the endoplasmic reticulum (ER), has recently been discovered to translocate into the nucleus of stressed and cancer cells where it assumes a new function reprogramming the transcriptome. This study explores the requirements of GRP78 nuclear translocation and its transcriptional activity and investigates the role of ER-associated degradation (ERAD) in the process. We show that the ER-processed, mature form of GRP78 is the major form of nuclear GRP78 and is the form with transcriptional regulatory activity. In contrast, exogenously expressed GRP78 designed to lack its ER signal peptide, thus preventing it from entering the ER or undergoing any ER-related processing/modification, while able to enter the nucleus, lacks transcriptional regulatory activity towards E-Box containing target genes. Additionally, the ATP-binding and substrate-binding activities of GRP78 are critical for this transcriptional regulatory function. We further discover that GRP94, an ER chaperone that acts in concert with GRP78 on protein folding, can translocate to the nucleus and co-localize with nuclear GRP78 upon ER stress. These findings suggest that some form of ER processing of GRP78, in addition to cleavage of the ER signal peptide, is critical for its nuclear activity and that in stressed cells, ER chaperones may assume new functions in the nucleus yet to be explored.