The accumulation of the intermediate filament protein, glial fibrillary acidic protein (GFAP), in astrocytes of Alexander disease (AxD) impairs proteasome function in astrocytes. We have explored the molecular mechanism that underlies the proteasome inhibition. We find that both assembled and unassembled wild type (wt) and R239C mutant GFAP protein interacts with the 20 S proteasome complex and that the R239C AxD mutation does not interfere with this interaction. However, the R239C GFAP accumulates to higher levels and forms more protein aggregates than wt protein. These aggregates bind components of the ubiquitin-proteasome system and, thus, may deplete the cytosolic stores of these proteins. We also find that the R239C GFAP has a greater inhibitory effect on proteasome system than wt GFAP. Using a ubiquitin-independent degradation assay in vitro, we observed that the proteasome cannot efficiently degrade unassembled R239C GFAP, and the interaction of R239C GFAP with proteasomes actually inhibits proteasomal protease activity. The small heat shock protein, alphaB-crystallin, which accumulates massively in AxD astrocytes, reverses the inhibitory effects of R239C GFAP on proteasome activity and promotes degradation of the mutant GFAP, apparently by shifting the size of the mutant protein from larger oligomers to smaller oligomers and monomers. These observations suggest that oligomeric forms of GFAP are particularly effective at inhibiting proteasome activity.