A histidine-tagged form of the recently discovered molecular chaperone, 70-kDa heat-shock cognate (Hsc70)-interacting protein (Hip), has been expressed in Escherichia coli and purified to near homogeneity. This protein remains soluble when expressed in E. coli. Several important properties of this chaperone have been investigated. HPLC size-exclusion chromatography indicates that the chaperone forms a tetramer similar to what has been reported for the native protein from rat liver cytosol. The recombinant form of Hip did not catalyze the hydrolysis of ATP and ATP analogs, although fluorescence measurements indicated that the chaperone recognizes anthraniloyl-dATP, anthraniloyl-ADP, and 2'-O-trinitrophenyl-ATP. The role of Hip as a molecular chaperone has been confirmed by its ability to strongly bind to the reduced, carboxymethylated form of alpha-lactalbumin. This interaction is specific for non-native domains since native alpha-lactalbumin fails to interact with Hip. Fluorescence-anisotropy measurements indicate that reduced, carboxymethylated lactalbumin binds Hip with a Kd of 5 microM. Although Hip appears to be able to bind nucleotides and non-native proteins, it is unable to facilitate the refolding of two denatured proteins, E. coli alkaline phosphatase and mitochondrial malate dehydrogenase. Hip inhibited the refolding of alkaline phosphatase and malic dehydrogenase. Inhibition occurred at near stoichiometric levels of Hip and could not be reversed by the addition of ATP. These results suggest that Hip may regulate the function of the Hsp70 molecular chaperone complex in vivo and play a critical role in protein folding in the eukaryotic cytoplasm.