Recent studies of GroE-mediated protein folding indicate that substrate proteins are productively released from a cis ternary complex in which the nonnative substrate is sequestered within the GroEL channel underneath GroES. Here, we examine whether protein folding can occur in this space. Stopped-flow fluorescence anisotropy of a pyrene-rhodanese-GroEl complex indicates that addition of GroES and ATP (but not ADP) leads to a rapid change in substrate flexibility at GroEL. Strikingly, when GroES release is blocked by the use of either a nonhydrolyzable ATP analog or a single-ring GroEL mutant, substrates complete folding while remaining associated with chaperonin. We conclude that the cis ternary complex, in the presence of ATP, is the active state intermediate in the GroE-mediated folding reaction: folding is initiated in this state and for some substrates may be completed prior to the timed release of GroES triggered by ATP hydrolysis.