The yeast ribosome-associated complex RAC and the Hsp70 homolog Ssb are anchored to the ribosome and together act as chaperones for the folding and co-translational assembly of nascent polypeptides. In addition, the RAC/Ssb system plays a crucial role in maintaining the fidelity of translation termination; however, the latter function is poorly understood. Here we show that the RAC/Ssb system promotes the fidelity of translation termination via two distinct mechanisms. First, via direct contacts with the ribosome and the nascent chain, RAC/Ssb facilitates the translation of stalling-prone poly-AAG/A sequences encoding for polylysine segments. Impairment of this function leads to enhanced ribosome stalling and to premature nascent polypeptide release at AAG/A codons. Second, RAC/Ssb is required for the assembly of fully functional ribosomes. When RAC/Ssb is absent, ribosome biogenesis is hampered such that core ribosomal particles are structurally altered at the decoding and peptidyl transferase centers. As a result, ribosomes assembled in the absence of RAC/Ssb bind to the aminoglycoside paromomycin with high affinity (KD = 76.6 nM) and display impaired discrimination between stop codons and sense codons. The combined data shed light on the multiple mechanisms by which the RAC/Ssb system promotes unimpeded biogenesis of newly synthesized polypeptides.