HSP60 is an essential gene in Saccharomyces cerevisiae. The protein forms homotetradecameric double toroid complexes. The flexible C-terminal end of each subunit, which is hydrophobic in nature, protrudes inside the central cavity where protein folding occurs. In order to study the functional role of the C-terminus of Hsp60, we generated and characterized yeast strains expressing mutants of Hsp60 proteins. Most of the yeast strains expressing Hsp60 with C-terminal deletions grew normally, unless the deletion impaired the interaction between neighboring subunits. The cells carrying Hsp60 mutants with an epitope of influenza hemagglutinin (HA) and T7 alone in the C-terminal region grew normally, but the mutant containing both HA and T7 was unable to grow in nonfermentable carbon sources. In vitro biochemical assays were performed using purified Hsp60 proteins. All the mutants examined remained capable of interacting with Hsp10 in a nucleotide-dependent manner. However, binding and/or refolding of denatured rhodanese became defective in most of the hsp60 mutants. Therefore, the hydrophobic C-terminal tail of Hsp60 plays an important role in the refolding of protein substrates, although it is flexible in structure.