Heat shock protein (Hsp) 40 facilitates the critical role of Hsp70 in a number of cellular processes such as protein folding, assembly, degradation and translocation in vivo. Hsp40 and Hsp70 stay in close contact to achieve these diverse functions. The conserved C-terminal EEVD motif in Hsp70 has been shown to regulate Hsp40-Hsp70 interaction by an unknown mechanism. Here, we provide a structural basis for this regulation by determining the crystal structure of yeast Hsp40 Sis1 peptide-binding fragment complexed with the Hsp70 Ssa1 C-terminal. The Ssa1 extreme C-terminal eight residues, G 634PTVEEVD641, form a β-strand with the domain I of Sis1 peptide-binding fragment. Surprisingly, the Ssa1 C-terminal binds Sis1 at the site where Sis1 interacts with the non-native polypeptides. The negatively charged residues within the EEVD motif in Ssa1 C-terminal form extensive charge-charge interactions with the positively charged residues in Sis1. The structure-based mutagenesis data support the structural observations. © 2006 Biochemical Society.