Ydj1p, a cytosolic DnaJ homolog from Saccharomyces cerevisiae, is demonstrated to function as a molecular chaperone. Purified Ydj1p formed complexes with non-native polypeptides and suppressed protein aggregation. Ydj1p cooperated with Ssa Hsp70 proteins in the prevention of protein aggregation, but not with the Ssb Hsp70 proteins. Cooperation between these different molecular chaperones was only observed in the presence of hydrolyzable ATP and correlated with the ability of Ydj1p to stimulate the ATPase activity of the Hsp70 homolog with which it was paired. The regulatory and chaperone activities of a eukarytic DnaJ homolog thus act together to assist Hsp70 in modulating the conformation of proteins.