Secretory and transmembrane proteins enter the endoplasmic reticulum (ER) as unfolded proteins and exit as either folded proteins in transit to their target organelles or as misfolded proteins targeted for degradation. The unfolded protein response (UPR) maintains the protein-folding homeostasis within the ER, ensuring that the protein-folding capacity of the ER meets the load of client proteins. Activation of the UPR depends on three ER stress sensor proteins, Ire1, PERK, and ATF6. Although the consequences of activation are well understood, how these sensors detect ER stress remains unclear. Recent evidence suggests that yeast Ire1 directly binds to unfolded proteins, which induces its oligomerization and activation. BiP dissociation from Ire1 regulates this oligomeric equilibrium, ultimately modulating Ire1’s sensitivity and duration of activation. The mechanistic principles of ER stress sensing are the focus of this review.