Group II chaperonins mediate protein folding in an ATP-dependent manner in eukaryotes and archaea. The binding of ATP and subsequent hydrolysis promotes the closure of the multi-subunit rings where protein folding occurs. The mechanism by which local changes in the nucleotide-binding site are communicated between individual subunits is unknown. The crystal structure of the archaeal chaperonin from Methanococcus maripaludis in several nucleotides bound states reveals the local conformational changes associated with ATP hydrolysis. Residue Lys-161, which is extremely conserved among group II chaperonins, forms interactions with the γ-phosphate of ATP but shows a different orientation in the presence of ADP. The loss of the ATP γ-phosphate interaction with Lys-161 in the ADP state promotes a significant rearrangement of a loop consisting of residues 160-169. We propose that Lys-161 functions as an ATP sensor and that 160-169 constitutes a nucleotide-sensing loop (NSL) that monitors the presence of the γ-phosphate. Functional analysis using NSL mutants shows a significant decrease in ATPase activity, suggesting that the NSL is involved in timing of the protein folding cycle.