Inside the endoplasmic reticulum (ER) formylglycine-generating enzyme (FGE) catalyzes in newly synthesized sulfatases the post-translational oxidation of a specific cysteine. Thereby formylglycine is generated, which is essential for sulfatase activity. Here we show that ERp44 interacts with FGE forming heterodimeric and, to a lesser extent, also heterotetrameric and octameric complexes, which are stabilized through disulfide bonding between cysteine 29 of ERp44 and cysteines 50 and 52 in the N-terminal region of FGE. ERp44 mediates FGE retrieval to the ER via its C-terminal RDEL signal. Increasing ERp44 levels by overexpression enhances and decreasing ERp44 levels by silencing reduces ER retention of FGE. Suppressing disulfide bonding by mutating the critical cysteines neither abrogates ERp44.FGE complex formation nor interferes with ERp44-mediated retention of FGE, indicating that noncovalent interactions between ERp44 and FGE are sufficient to mediate ER retention. The N-terminal region of FGE harboring Cys(50) and Cys(52) is dispensible for catalytic activity in vitro but required for FGE-mediated activation of sulfatases in vivo. This in vivo activity is affected neither by overexpression nor by silencing of ERp44, indicating that a further ER component interacting with the N-terminal extension of FGE is critical for sulfatase activation.