The adaptation of protein synthesis to environmental and physiological challenges is essential for cell viability. Here, we show that translation is tightly linked to the protein‐folding environment of the cell through the functional properties of the ribosome bound chaperone NAC (nascent polypeptide‐associated complex). Under non‐stress conditions, NAC associates with ribosomes to promote translation and protein folding. When proteostasis is imbalanced, NAC relocalizes from a ribosome‐associated state to protein aggregates in its role as a chaperone. This results in a functional depletion of NAC from the ribosome that diminishes translational capacity and the flux of nascent proteins. Depletion of NAC from polysomes and re‐localisation to protein aggregates is observed during ageing, in response to heat shock and upon expression of the highly aggregation‐prone polyglutamine‐expansion proteins and Aβ‐peptide. These results demonstrate that NAC has a central role as a proteostasis sensor to provide the cell with a regulatory feedback mechanism in which translational activity is also controlled by the folding state of the cellular proteome and the cellular response to stress.