The expression of heat shock genes in Escherichia coli is regulated by the antagonistic action of the transcriptional activator, the σ32 subunit of RNA polymerase, and negative modulators. Modulators are the DnaK chaperone system, which inactivates and destabilizes σ32, and the FtsH protease, which is largely responsible for σ32 degradation. A yet unproven hypothesis is that the degree of sequestration of the modulators through binding to misfolded proteins determines the level of heat shock gene transcription. This hypothesis was tested by altering the modulator concentration in cells expressing dnaK, dnaJ and ftsH from IPTG and arabinose-controlled promoters. Small increases in levels of DnaK and the DnaJ co-chaperone (<1.5-fold of wild type) resulted in decreased level and activity of σ32 at intermediate temperature and faster shut-off of the heat shock response. Small decreases in their levels caused inverse effects and, furthermore, reduced the refolding efficiency of heat-denatured protein and growth at heat shock temperatures. Fewer than 1500 molecules of a substrate of the DnaK system, structurally unstable firefly luciferase, resulted in elevated levels of heat shock proteins and a prolonged shut-off phase of the heat shock response. In contrast, a decrease in FtsH levels increased the σ32 levels, but the accumulated σ32 was inactive, indicating that sequestration of FtsH alone cannot induce the heat shock response efficiently. DnaK and DnaJ thus constitute the primary stress-sensing and transducing system of the E. coli heat shock response, which detects protein misfolding with high sensitivity.