The DnaK chaperone of Escherichia coli assists protein folding by an ATP-dependent interaction with short peptide stretches within substrate polypeptides. This interaction is regulated by the DnaJ and GrpE co-chaperones, which stimulate ATP hydrolysis and nucleotide exchange by DnaK, respectively. Furthermore, GrpE has been claimed to trigger substrate release independent of its role as a nucleotide exchange factor. However, we show here that GrpE can accelerate substrate release from DnaK exclusively in the presence of ATP. In addition, GrpE prevented the association of peptide substrates with DnaK through an activity of its N-terminal 33 amino acids. A ternary complex of GrpE, DnaK, and a peptide substrate could be observed only when the peptide binding to DnaK precedes GrpE binding. Furthermore, we demonstrate that GrpE slows down the release of a protein substrate, sigma(32), from DnaK in the absence of ATP. These findings suggest that the ATP-triggered dissociation of GrpE and substrates from DnaK occurs in a concerted fashion.