DNA-damage inducible 1 homolog 2 (DDI2) is a protease that activates the transcription factor NRF1. Cellular models have shown that this pathway contributes to cell-stress adaptation, for example, on proteasome inhibition. However, DDI2 physiological function is unknown. Ddi2 Knock-out (KO) mice were embryonic lethal. Therefore, we generated liver-specific Ddi2-KO animals and used comprehensive genetic analysis to identify the molecular pathways regulated by DDI2. Here, we demonstrate that DDI2 contributes to metallothionein (MT) expression in mouse and human hepatocytes at basal and upon cadmium (Cd) exposure. This transcriptional program is dependent on DDI2-mediated NRF1 proteolytic maturation. In contrast, NRF1 homolog NRF2 does not contribute to MT production. Mechanistically, we observed that Cd exposure inhibits proteasome activity, resulting in DDI2-mediated NRF1 proteolytic maturation. In line with these findings, DDI2 deficiency sensitizes cells to Cd toxicity. This study identifies a function for DDI2 that links proteasome homeostasis to heavy metal mediated toxicity.