The formation of membraneless organelles can be a proteotoxic stress control mechanism that locally condenses a set of components capable of mediating protein degradation decisions. The breadth of mechanisms by which cells respond to stressors and form specific functional types of membraneless organelles, is incompletely understood. We found that Bcl2-associated athanogene 2 (BAG2) marks a distinct phase-separated membraneless organelle, triggered by several forms of stress, particularly hyper-osmotic stress. Distinct from well-known condensates such as stress granules and processing bodies, BAG2-containing granules lack RNA, lack ubiquitin and promote client degradation in a ubiquitin-independent manner via the 20S proteasome. These organelles protect the viability of cells from stress and can traffic to the client protein, in the case of Tau protein, on the microtubule. Components of these ubiquitin-independent degradation organelles include the chaperone HSP-70 and the 20S proteasome activated by members of the PA28 (PMSE) family. BAG2 condensates did not co-localize with LAMP-1 or p62/SQSTM1. When the proteasome is inhibited, BAG2 condensates and the autophagy markers traffic to an aggresome-like structure.