The Escherichia coli proteins GroEL and GroES were the first chaperones to be studied in detail and have thus become a role model for assisted protein folding in general. A wealth of both structural and functional data on the GroE system has been accumulated over the past years, enabling us now to understand the basic principles of how this fascinating protein-folding machine accomplishes its task. According to the current model, GroE processes a nonnative polypeptide in a cycle consisting of three steps. First, the polypeptide substrate is captured by GroEL. Upon binding of the co-chaperone GroES and ATP, the substrate is then discharged into a unique microenvironment inside of the chaperone, which promotes productive folding. After hydrolysis of ATP, the polypeptide is released into solution. Moreover, GroE may actively increase the folding efficiency, e.g. by unfolding of misfolded protein molecules. The mechanisms underlying these features, however, are yet not well characterized.