We studied the molecular nature of the interaction between the integral membrane protein Sec63p and the lumenal Hsp70 BiP to elucidate their role in the process of precursor transit into the ER of Saccharomyces cerevisiae. A lumenal stretch of Sec63p with homology to the Escherichia coli protein DnaJ is the likely region of interface between Sec63p and BiP. This domain, purified as a fusion protein (63Jp) with glutathione S-transferase (GST), mediated a stable ATP-dependent binding interaction between 63Jp and BiP and stimulated the ATPase activity of BiP. The interaction was highly selective because only BiP was retained on immobilized 63Jp when detergent-solubilized microsomes were mixed with ATP and the fusion protein. GST alone was inactive in these assays. Additionally, a GST fusion containing a point mutation in the lumenal domain of Sec63p did not interact with BiP. Finally, we found that the soluble Sec63p lumenal domain inhibited efficient precursor import into proteoliposomes reconstituted so as to incorporate both BiP and the fusion protein. We conclude that the lumenal domain of Sec63p is sufficient to mediate enzymatic interaction with BiP and that this interaction positioned at the translocation apparatus or translocon at the lumenal face of the ER is vital for protein translocation into the ER.