Hsp70 chaperons interact with protein substrates in an ATP-dependent manner to prevent aggregation and promote protein folding. For the Escherichia coli homolog DnaK, we have characterized the ATP hydrolysis cycle as well as the effects of the DnaJ and GrpE cofactors on substrate interaction to reach conclusions on the functional cycle. DnaK ATPase was stimulated by substrates (ninefold) and DnaJ (13-fold) through stimulation of the rate limiting step, gamma-phosphate cleavage (approximately tenfold slower than ADP release). Substrates stimulate ATPase after binding with high affinity (KA < 10 microM) to preformed DnaK-ATP complexes. The rapid binding kinetics lead to the conclusion that ATP-bound DnaK is the primary form initiating interaction with substrates for chaperone activity. The resulting DnaK-ATP-substrate complexes, however, are also characterized by rapid dissociation of bound substrate, but can be stabilized by hydrolysis of ATP (stimulated either by the substrate itself or DnaJ through their effects on the rate-limiting step). Stimulation of the gamma-phosphate cleavage reaction by DnaJ is much more efficient (complete conversion of bound ATP to ADP within five seconds) than that by substrates, indicating the special and important role for DnaJ in stabilization of DnaK-substrate interactions.