Transcription factor involved in unfolded protein response (UPR). In the absence of endoplasmic reticulum (ER) stress, inserted into ER membranes, with N-terminal DNA-binding and transcription activation domains oriented toward the cytosolic face of the membrane. In response to ER stress, transported to the Golgi, where it is cleaved in a site-specific manner by resident proteases S1P/MBTPS1 and S2P/MBTPS2. The released N-terminal cytosolic domain is translocated to the nucleus to effect transcription of specific target genes. Plays a critical role in chondrogenesis by activating the transcription of SEC23A, which promotes the transport and secretion of cartilage matrix proteins, and possibly that of ER biogenesis-related genes. In a neuroblastoma cell line, protects cells from ER stress-induced death. In vitro activates transcription of target genes via direct binding to the CRE site.