hsp70 proteins of both eukaryotes and prokaryotes possess both ATPase and peptide binding activities. These two activities are crucial for the chaperone activity of hsp70 proteins. The activity of DnaK, the primary hsp70 of Escherichia coli, is modulated by the GrpE and DnaJ proteins. In the yeast Saccharomyces cerevisiae, the predominant cytosolic hsp70, Ssa1p, interacts with a DnaJ homologue, Ydj1p. In order to better understand the function of the Ssa1p/Ydj1p chaperone, the effects of polypeptide substrates and Ydj1p on Ssa1p ATPase activity were assessed using a combination of steady-state kinetic analysis and single turnover substrate hydrolysis experiments. Polypeptide substrates and Ydj1p both serve to stimulate ATPase activity of Ssa1p. The two types of effector are biochemically distinct, each conferring a characteristic K+ dependence on Ssa1p ATPase activity. However, in single turnover ATP hydrolysis experiments, both polypeptide substrates and Ydj1p destabilized the ATP.Ssa1p complex through a combination of accelerated hydrolysis of bound ATP and accelerated release of ATP from Ssa1p. The acceleration of ATP release by Ydj1p is a previously unidentified function of a DnaJ homologue. In the case of Ydj1p-stimulated Ssa1p, steady-state ATPase activity is increased less than 2-fold at physiological K+ concentrations, despite a 15-fold increase in the hydrolysis of bound ATP. The primary effect of Ydj1p appears to be to disfavor an ATP form of Ssa1p. On the other hand, peptide stimulation of Ssa1p ATPase activity was enhanced at physiological K+ concentrations, supporting the idea that cycles of ATP hydrolysis play an important role in the interaction of hsp70 with polypeptide substrates. The enhanced ATP dissociation caused by both polypeptide substrates and Ydj1p may play a role in the regulation of Ssa1p chaperone activity by altering the relative abundance of ATP-and ADP-bound forms.