In Drosophila cells, regulatory mechanisms not only act to provide rapid induction of hsp70 during heat shock but also to prevent expression at normal temperatures. To determine whether expression of hsp70 is detrimental to cells growing at normal temperatures, we used heterologous promoters to force expression of the protein in tissue culture cells and in larval salivary glands. Initially, constitutive expression of hsp70 substantially reduces the rate of cell growth. With continued expression, however, growth rates recover. At the same time, the intracellular distribution of hsp70 changes. Immediately after induction, the protein is diffusely distributed throughout the cell, but as growth resumes it coalesces into discrete points of high concentration, which we term hsp70 granules. hsp70 granules are also observed both in wild-type Drosophila tissue culture cells and in salivary glands after extended periods of recovery from heat shock. The protein in these granules appears to be irreversibly inactivated. It cannot be dispersed with a second heat shock, and cells containing these granules do not show thermotolerance. Only partial overlap between hsp70 granules and lysosomes indicates that the granules form independently of lysosomes. We conclude that expression of hsp70 is detrimental to growth at normal temperatures. We suggest that the change in hsp70 distribution, from diffuse to granular, represents a mechanism for controlling the protein's activity by sequestration.