Newly synthesised secretory proteins fold in the endoplasmic reticulum, failure of which can be toxic and cause disease. Alpha1-antitrypsin is the serine protease inhibitor (serpin) that is secreted mainly by hepatocytes and acts in lungs where its major function is to inhibit neutrophil elastase. Neuroserpin is a serine protease inhibitor expressed in the nervous system. Mutations in these two proteins can cause them to polymerise and accumulate within endoplasmic reticulum (ER) causing its fragmentation into ER inclusions. Accumulation of these serpins leads to cirrhosis and early-onset dementia respectively. Molecular mechanisms of these diverse pathologies remain incompletely understood. Utilising a range of advanced live-cell imaging techniques I showed that serpin polymers undergo a liquid:solid phase transition, filling the lumen of the ER with a protein matrix that imposes molecular filtration, retarding the mobility of ER proteins in a size-dependent manner. I demonstrated that serpins’ phase transition is promoted by the ATF6 branch of the unfolded protein response during ER stress, and overexpression of ER chaperones calreticulin and BiP promotes this solidification and increases the stiffness of the resultant protein matrix. Single particle tracking of ER proteins revealed that this process initiates in cells with normal reticular ER morphology. This novel mechanism of ER dysfunction, involving phase transition of a protein in the ER lumen, provides a template for understanding related proteinopathies as diverse as an autosomal dominant form of dementia and diabetes insipidus, and identifies ER quality control components as potential therapeutic targets.