Fibroblast activation protein (FAP) is a focus of interest as a potential cancer therapy target. This membrane bound protease possesses the unique catalytic activity of hydrolysis of the post-proline bond two or more residues from the N-terminus of substrates. FAP is highly expressed in activated fibroblastic cells in tumours, arthritis and fibrosis. A rare, novel, human polymorphism, C1088T, encoding Ser363 to Leu, occurring in the sixth blade of the β propeller domain, was identified in a family. Both in primary human fibroblasts and in Ser363LeuFAP transfected cells, we showed that this single substitution ablates FAP dimerisation and causes loss of enzyme activity. Ser363LeuFAP was detectable only in endoplasmic reticulum (ER), in contrast to the distribution of wild-type FAP on the cell surface. The variant FAP showed decreased conformational antibody binding, consistent with an altered tertiary structure. Ser363LeuFAP expression was associated with upregulation of the ER chaperone BiP/GRP78, ER stress sensor ATF6, and the ER stress response target phospho-eIF2α, all indicators of ER stress. Proteasomal inhibition resulted in accumulation of Ser363LeuFAP, indicating the involvement of ER associated degradation (ERAD). Neither CHOP expression nor apoptosis was elevated, so ERAD is probably important for protecting Ser363LeuFAP expressing cells. These data on the first loss of function human FAP gene variant indicates that although the protein is vulnerable to an amino acid substitution in the β-propeller domain, inactive, unfolded FAP can be tolerated by cells.