DnaJ is a universally conserved heat shock protein involved in protein folding. DnaJ contains four conserved domains. The N-terminal 'J-domain' has been shown to be responsible for the recruitment of its specific DnaK partner protein. The 'Gly/Phe'- and 'Cys-rich' domains have been implicated in stabilizing interactions with DnaK. DnaJ is also able to interact independently with unfolded or native polypeptides. Very little is known regarding such binding/chaperone abilities, but it has been suggested that the least conserved carboxy-terminal domain could contribute to these properties. To gain insight into the biological activity of this fourth domain, we deleted two relatively conserved patches of amino acid residues, a 'G-rich' cluster and a 'G-D-L-Y-V' motif, resulting in the DnaJΔ[230-238] and DnaJΔ[242-246] mutant proteins respectively. Both mutant proteins are partially defective in stimulating the ATPase activity of DnaK and in preventing aggregation of firefly luciferase in vitro. Both mutants have lost the ability to regulate the σ32-dependent heat shock response, as shown in vivo using a heat shock transcriptional fusion. Furthermore, and unlike wild-type DnaJ, DnaJΔ[242-246] is unable to assist the DnaK-dependent refolding of denatured luciferase. In agreement with these results, we found that DnaJΔ[242-246] is unable to restore either the temperature-sensitive phenotype or the motility defect of a dnaJ null mutation. Substitution of amino acids [242-246] by five alanines leads to similar phenotypic defects, suggesting that altering the 'G-D-L-Y-V' motif leads to partial loss of DnaJ activity. Our data clearly support a role in the intrinsic chaperone/substrate binding ability of the carboxy-terminal domain of DnaJ.