In this study, we have used surface plasmon resonance (SPR) and isothermal microtitration calorimetry (ITC) to study the mechanism of complex formation between the Hsp70 molecular chaperone, DnaK, and its cochaperone, GrpE, which is a nucleotide exchange factor. Experiments were geared toward understanding the influence of DnaK's three domains, the ATPase (residues 1-388), substrate-binding (residues 393-507), and lid (residues 508-638) domains, on complex formation with GrpE. We show that the equilibrium dissociation constants for the interaction of GrpE with wtDnaK, lidless DnaK(2517), the ATPase domain (2-388), and the substrate-binding fragment (393-507) are 64 (±16) nM, 4.0 (±1.5) nM, 35 (±10) nM, and 67 (±11) μM, respectively, and that the on-rate constant for the different reactions varies by over 4 orders of magnitude. SPR experiments revealed that GrpE-DnaK(393-507) complex formation is inhibited by added peptide and abolished when the 33-residue flexible "tail" of GrpE is deleted. Such results strongly suggest that the 33-residue flexible N-terminal tail of GrpE binds in the substrate-binding pocket of DnaK. This unique mode of binding between GrpE's tail and DnaK contributes to, but does not fully explain, the decrease in Kd from 64 to 4 nM upon deletion of DnaK's lid. The possibility that deletion of DnaK's lid creates a more symmetrically shaped molecule, with enhanced affinity to GrpE, is also discussed. Our results reveal a complex set of molecular interactions between DnaK and its cochaperone GrpE. We discuss the impact of each domain on complex formation and dissociation.