Lafora disease (LD), a progressive form of inherited epilepsy, is associated with widespread neurodegeneration and the formation of polyglucosan bodies in the neurons. Laforin, a protein phosphatase, and malin, an E3 ubiquitin ligase, are two of the proteins that are defective in LD. We have shown recently that laforin and malin (referred together as LD proteins) are recruited to aggresome upon proteasomal blockade, possibly to clear misfolded proteins through the ubiquitin-proteasome system (UPS). Here we test this possibility using a variety of cytotoxic misfolded proteins, including the expanded polyglutamine protein, as potential substrates. Laforin and malin, together with Hsp70 as a functional complex, suppress the cellular toxicity of misfolded proteins, and all the three members of this complex are required for this function. Laforin and malin interact with misfolded proteins and promote their degradation through the UPS. LD proteins are recruited to the polyglutamine aggregates and reduce the frequency of aggregate-positive cells. Taken together, our results suggest that the malin-laforin complex is a novel player in the neuronal response to misfolded proteins and could be potential therapeutic targets for neurodegenerative disorders associated with cytotoxic proteins.