The endoplasmic reticulum (ER) is a central hub where secreted or membrane-bound proteins are maturated and folded properly in eukaryotes. Maintenance of ER homeostasis is particularly important for human fungal pathogens, such as Cryptococcus neoformans, which encounter a plethora of host-mediated stresses during infection. Our previous study demonstrated that the unfolded protein response (UPR) pathway, composed of the evolutionarily conserved Ire1 kinase and the unique Hxl1 transcription factor, has pleiotropic roles in ER stress response, thermotolerance, antifungal drug resistance, and virulence in C. neoformans. Here, we functionally characterized an ER-resident molecular chaperone, Kar2/BiP, in C. neoformans. Conditional expression of KAR2 by the copper-regulated promoter revealed that Kar2 is essential for the viability of C. neoformans. Constitutive expression of KAR2 by the strong histone H3 promoter partially restores resistance to ER stress, cell wall stress, thermotolerance, and genotoxic stress in ire1Δ and hxl1Δ mutants, suggesting that Kar2 mainly functions downstream of the UPR pathway. Furthermore, Kar2 appears to control azole resistance in C. neoformans downstream of the UPR pathway without regulation of ERG11 or ERG3. Interestingly, we discovered that azole treatment is sensed as ER-stress and subsequently activates the Ire1-dependent Hxl1 splicing event and induction of KAR2 by the UPR pathway. In contrast, the constitutive expression of Kar2 is not sufficient to restore the Ire1-mediated regulation of capsule production in C. neoformans UPR mutants. In conclusion, this study demonstrates that Kar2 is not only essential for vegetative growth but also required for response and adaptation to the environmental stresses and antifungal drugs downstream of the UPR pathway in C. neoformans.