Endoplasmic reticulum (ER) stress activates the Unfolded Protein Response, a compensatory signaling response that is mediated by the IRE-1, PERK/PEK-1, and ATF-6 pathways in metazoans. Genetic studies have implicated roles for UPR signaling in animal development and disease, but the function of the UPR under physiological conditions, in the absence of chemical agents administered to induce ER stress, is not well understood. Here, we show that in Caenorhabditis elegans XBP-1 deficiency results in constitutive ER stress, reflected by increased basal levels of IRE-1 and PEK-1 activity under physiological conditions. We define a dynamic, temperature-dependent requirement for XBP-1 and PEK-1 activities that increases with immune activation and at elevated physiological temperatures in C. elegans. Our data suggest that the negative feedback loops involving the activation of IRE-1-XBP-1 and PEK-1 pathways serve essential roles, not only at the extremes of ER stress, but also in the maintenance of ER homeostasis under physiological conditions.