SHQ1 was reported to control the biogenesis and assembly of H/ACA ribonucleoprotein particles (RNPs). It was independently isolated as a growth suppressor, GRIM1, in a genetic screen. Recent studies have indicated that SHQ1 inhibits prostate cancer growth and metastasis. SHQ1 facilitates MYC RNA splicing to promote T-acute lymphoblastic leukemia (T-ALL) development. Thus, the mechanisms of SHQ1 in cancers remain largely unknown. We report here that SHQ1 promotes tumor apoptosis and chemo-sensitivity in hepatocellular carcinoma (HCC) cells. In HCC tissues from patients, expression of SHQ1 was significantly decreased in the tumor compared to adjacent tissues. Experiments with HCC xenograft models revealed that restoring SHQ1 levels enhanced the anti-tumor activity of the endoplasmic reticulum (ER) stress inducer tunicamycin (TM) and common chemotherapy drug paclitaxel (PTX). Mechanistically, SHQ1 is an ER-stress response gene which is regulated by p50ATF6 and XBP1s through an ER stress response like element located on the SHQ1 promoter. SHQ1 interacts with the ER chaperone GRP78 to release ER sensors PERK/IRE1α/ATF6 from GRP78/ER-sensor complexes, leading to hyper-activation of unfolded protein response (UPR). In the persistent ER stress conditions of a HepG2 xenograft tumor model, SHQ1-mediated hyper-activation of ER-sensor signaling induces apoptosis. Our study thus demonstrates a SHQ1-mediated ER-stress response feedback loop that promotes tumor sensitivity to chemotherapeutics.