The unfolded protein response (UPR) is constitutively active in yeast thioredoxin reductase mutants suggesting a link between cytoplasmic thiol redox control and ER oxidative protein folding. The unique oxidative environment of the ER lumen requires tight regulatory control and we show that the active UPR is dependent on the presence of oxidised thioredoxins, rather than arising due to a loss of thioredoxin function. Preventing activation of the UPR by deletion of HAC1, encoding the UPR transcription factor, rescues a number of thioredoxin reductase mutant phenotypes including slow growth, shortened longevity and oxidation of the cytoplasmic glutathione pool. This is because the constitutive UPR in a thioredoxin reductase mutant results in the generation of hydrogen peroxide. The oxidation of thioredoxins in a thioredoxin reductase mutant requires aerobic metabolism and the presence of the Tsa1 and Tsa2 peroxiredoxins indicating that a complete cytoplasmic thioredoxin system is crucial for maintaining ER redox homeostasis.