A key morphological feature of inflammatory bowel disease (IBD) is the loss of the barrier function of intestinal epithelial cells. The present study investigates endoplasmic reticulum (ER) stress in addition to alterations in protein and membrane trafficking in a dextran sulfate sodium (DSS)-induced IBD-like phenotype of intestinal Caco-2 cells in culture. DSS treatment significantly reduced the transepithelial electric resistance (TEER) and increased the epithelial permeability of Caco-2 cells, without affecting their viability. This was associated with an alteration in the expression levels of inflammatory factors in addition to an increase in the expression of the ER stress protein markers, namely immunoglobulin-binding protein (BiP), C/EBP homologous protein (CHOP), activation transcription factor 4 (ATF4), and X-box binding protein (XBP1). The DSS-induced ER-stress resulted in impaired intracellular trafficking and polarized sorting of sucrase-isomaltase (SI) and dipeptidyl peptidase-4 (DPPIV), which are normally sorted to the apical membrane via association with lipid rafts. The observed impaired sorting was caused by reduced cholesterol levels and subsequent distortion of the lipid rafts. The data presented confirm perturbation of ER homeostasis in DSS-treated Caco-2 cells, accompanied by impairment of membrane and protein trafficking resulting in altered membrane integrity, cellular polarity, and hence disrupted barrier function.