The Sse1/Hsp110 molecular chaperones are a poorly understood subgroup of the Hsp70 chaperone family. Hsp70 can refold denatured polypeptides via a C-terminal peptide binding domain (PBD), which is regulated by nucleotide cycling in an N-terminal ATPase domain. However, unlike Hsp70, both Sse1 and mammalian Hsp110 bind unfolded peptide substrates but cannot refold them. To test the in vivo requirement for interdomain communication, SSE1 alleles carrying amino acid substitutions in the ATPase domain were assayed for their ability to complement sse1Delta yeast. Surprisingly, all mutants predicted to abolish ATP hydrolysis (D8N, K69Q, D174N, D203N) complemented the temperature sensitivity of sse1Delta and lethality of sse1Deltasse2Delta cells, whereas mutations in predicted ATP binding residues (G205D, G233D) were non-functional. Complementation ability correlated well with ATP binding assessed in vitro. The extreme C terminus of the Hsp70 family is required for substrate targeting and heterocomplex formation with other chaperones, but mutant Sse1 proteins with a truncation of up to 44 C-terminal residues that were not included in the PBD were active. Remarkably, the two domains of Sse1, when expressed in trans, functionally complement the sse1Delta growth phenotype and interact by coimmunoprecipitation analysis. In addition, a functional PBD was required to stabilize the Sse1 ATPase domain, and stabilization also occurred in trans. These data represent the first structure-function analysis of this abundant but ill defined chaperone, and establish several novel aspects of Sse1/Hsp110 function relative to Hsp70.