Hsp70 chaperones assist in protein folding, disaggregation, and membrane translocation by binding to substrate proteins with an ATP-regulated affinity that relies on allosteric coupling between ATP-binding and substrate-binding domains. We have studied single- and two-domain versions of the E. coli Hsp70, DnaK, to explore the mechanism of interdomain communication. We show that the interdomain linker controls ATPase activity by binding to a hydrophobic cleft between subdomains IA and IIA. Furthermore, the domains of DnaK dock only when ATP binds and behave independently when ADP is bound. Major conformational changes in both domains accompany ATP-induced docking: of particular importance, some regions of the substrate-binding domain are stabilized, while those near the substrate-binding site become destabilized. Thus, the energy of ATP binding is used to form a stable interface between the nucleotide- and substrate-binding domains, which results in destabilization of regions of the latter domain and consequent weaker substrate binding.