In Saccharomyces cerevisiae Ydj1p, a DnaJ homolog, is localized to the cytosol with the Ssa and Ssb Hsp70 proteins. Ydj1p helps facilitate polypeptide translocation across mitochondrial and endoplasmic reticulum membranes (Caplan, A. J., Cyr, D. M., and Douglas, M. G. (1992) Cell 71, 1143-1155) and can directly interact with Ssa1p to regulate chaperone activity (Cyr, D. M., Lu, X., and Douglas, M. G. (1992) J. Biol. Chem. 267, 20927-20931). In this study, the role of Ydj1p in modulating ATP-dependent reactions catalyzed by Ssa and Ssb Hsp70 proteins has been examined using purified components and compared with that of other Hsp70 homologs BiP and DnaK. Ssa1p, Ssa2p, and Ssb1/2p all formed stable complexes with the mitochondrial presequence peptide, F1 beta(1-51). ATP alone had only modest effects on polypeptide complex formation with Ssa1p and Ssa2p, but prevented the majority of polypeptide binding to BiP and DnaK. ATP by itself also reduced polypeptide binding to Ssb1/2p to a level that was intermediate between that observed for the Ssa Hsp70 proteins tested and BiP and DnaK. ATP hydrolysis by Ssa1p, Ssa2p, and Ssb1/2p occurred at similar rates. Ydj1p was a potent modulator of the both the ATPase and polypeptide binding activities of Ssa1p and Ssa2p. In contrast, Ydj1p had little effect on the ATPase and polypeptide binding activity of Ssb1/2p. Therefore the chaperone-related activities of Ssa and Ssb Hsp70 proteins exhibit significant differences in sensitivity to ATP and YDJ1p. These data indicate that regulation of Hsp70 activity by DnaJ homologs can be specific. The specificity of interactions between Ydj1p and the Ssa and Ssb Hsp70 proteins observed could contribute in determining the functional specificity of these chaperones in the cytosol. In related experiments, F1 beta(1-51) was found to reduce the extent to which Ydj1p stimulated Ssa1p ATPase activity. This effect correlated with the formation of F1 beta(1-51).Ssa1p complexes. We propose that intramolecular communication between the polypeptide binding, ATPase and DnaJ regulatory domains on Ssa1p plays a role in the regulation of chaperone activity.