The proteasome-activating nucleotidase (PAN) from Methanococcus jannaschii is a complex of relative molecular mass 650,000 that is homologous to the ATPases in the eukaryotic 26S proteasome. When mixed with 20S archaeal proteasomes and ATP, PAN stimulates protein degradation. Here we show that PAN reduces aggregation of denatured proteins and enhances their refolding. These processes do not require ATP hydrolysis, although ATP binding enhances the ability of PAN to prevent aggregation. PAN also catalyses the unfolding of the green fluorescent protein with an 11-residue ssrA extension at its carboxy terminus (GFP11). This unfolding requires ATP hydrolysis, and is linked to GFP11 degradation when 20S proteasomes are also present. This unfolding activity seems to be essential for ATP-dependent proteolysis, although PAN may function by itself as a molecular chaperone.