Mge1, a GrpE-related protein in the mitochondrial matrix of the budding yeast Saccharomyces cerevisiae, is required for translocation of precursor proteins into mitochondria. The effect of Mge1 on nucleotide release from Ssc1, an Hsp70 of the mitochondrial matrix, was analyzed. The release of both ATP and ADP from Ssc1 was stimulated in the presence of Mge1, therefore we conclude that Mge1 functions as a nucleotide release factor for Ssc1. Mge1 bound stably to Ssc1 in vitro; this interaction was resistant to high concentrations of salt but was disrupted by the addition of ATP. ADP was much less effective in releasing Mge1 from Ssc1 whereas ATP gamma S and AMPPNP could not disrupt the Ssc1/Mge1 complex. Ssc1-3, a temperature sensitive SSC1 mutant protein, did not form a detectable complex with Mge1. Consistent with the lack of a detectable interaction, Mge1 did not stimulate nucleotide release from Ssc1-3. A conserved loop structure on the surface of the ATPase domain of DnaK has been implicated in its interaction with GrpE. Since the single amino acid change in Ssc1-3 lies very close to the analogous loop in Ssc1, the role of this loop in the Ssc1:Mge1 interaction was investigated. Deletion of the loop abolished the physical and functional interaction of Ssc1 with Mge1, suggesting that the loop in Ssc1 is also important for the Ssc1:Mge1 interaction. Two mutants with single amino acid changes within the loop did not eliminate the stable binding of Mge1, yet the binding of Mge1 did not stimulate the release of nucleotides from the mutant SSC1 proteins. We propose that the loop region of Ssc1 is important for the physical interaction between Mge1 and Ssc1, and for generation of a conformational change necessary for Mge1-induced nucleotide release.