Central to the chaperone function of Hsp70 stress proteins including Escherichia coli DnaK is the ability of Hsp70 to bind unfolded protein substrates in an ATP-dependent manner. Mg2+/ATP dissociates bound substrates and, furthermore, substrate binding stimulates the ATPase of Hsp70. This coupling is proposed to require a glutamate residue, E175 of bovine Hsc70, that is entirely conserved within the Hsp70 family, as it contacts bound Mg2+/ATP and is part of a hinge required for a postulated ATP-dependent opening/closing movement of the nucleotide binding cleft which then triggers substrate release. We analyzed the effects of dnaK mutations which alter the corresponding glutamate-171 of DnaK to alanine, leucine or lysine. In vivo, the mutated dnaK alleles failed to complement the delta dnaK52 mutation and were dominant negative in dnaK+ cells. In vitro, all three mutant DnaK proteins were inactive in known DnaK-dependent reactions, including refolding of denatured luciferase and initiation of lambda DNA replication. The mutant proteins retained ATPase activity, as well as the capacity to bind peptide substrates. The intrinsic ATPase activities of the mutant proteins, however, did exhibit increased Km and Vmax values. More importantly, these mutant proteins showed no stimulation of ATPase activity by substrates and no substrate dissociation by Mg2+/ATP. Thus, glutamate-171 is required for coupling of ATPase activity with substrate binding, and this coupling is essential for the chaperone function of DnaK.