Sis1 is an essential yeast Type II Hsp40 protein that assists cytosolic Hsp70 Ssa1 in the facilitation of processes that include translation initiation, the prevention of protein aggregation, and proteasomal protein degradation. An essential function of Sis1 and other Hsp40 proteins is the binding and delivery of non-native polypeptides to Hsp70. How Hsp40s function as molecular chaperones is unknown. The crystal structure of a Sis1 fragment that retains peptide-binding activity suggests that Type II Hsp40s utilize hydrophobic residues located in a solvent-exposed patch on carboxyl-terminal domain I to bind non-native polypeptides. To test this model, amino acid residues Val-184, Leu-186, Lys-199, Phe-201, Ile-203, and Phe-251, which form a depression in carboxyl-terminal domain I, were mutated, and the ability of Sis1 mutants to support cell viability and function as molecular chaperones was examined. We report that Lys-199, Phe-201, and Phe-251 are essential for cell viability and required for Sis1 polypeptide binding activity. Sis1 I203T could support normal cell growth, but when purified it exhibited severe defects in chaperone function. These data identify essential residues in Sis1 that function in polypeptide binding and help define the nature of the polypeptide-binding site in Type II Hsp40 proteins.