The structural and functional organization of Escherichia coli polypeptide chain release factors 1 and 2 (RF-1 and RF-2) was investigated by limited proteolysis with trypsin and chymotrypsin. A protease-sensitive site was found in a similar position in both factors at the beginning of a highly conserved region in the C-terminal part of the proteins. Chymotrypsin cleavage of RF-2 yielded a nicked form with the fragments associated. This nicked factor lost in vitro peptidyl-tRNA hydrolysis activity (a peptidyltransferase function) but had enhanced in vitro codon-ribosome binding activity (a decoding site function). It inhibited codon-dependent f[3H]Met-tRNA hydrolysis activity of intact RF-1 and RF-2, presumably as a result of an increased affinity for ribosomes. These data are consistent with a model whereby the release factor acts like a tRNA analog spanning the decoding and peptidyltransferase centers on the ribosome. The proteolytic sensitivity of the RFs most likely reflects an exposed surface loop. We propose that this loop interacts with the ribosomal peptidyltransferase site and that the stabilization of factor:ribosome binding upon cleavage could be explained by conformational coupling between domains on the factor for codon-ribosome binding at the decoding site and interaction with peptidyltransferase.