Cer1p/Lhs1p/Ssi1p is a novel Hsp70-related protein that is important for the translocation of a subset of proteins into the yeast Saccharomyces cerevisiae endoplasmic reticulum. Cer1p has very limited amino acid identity to the hsp70 chaperone family in the N-terminal ATPase domain but lacks homology to the highly conserved hsp70 peptide binding domain. The role of Cer1p in protein folding and translocation was assessed. Deletion of CER1 slowed the folding of reduced pro-carboxypeptidase Y (pro-CPY) approximately twofold in yeast. In wild-type yeast under reducing conditions, pro-CPY can be found in a complex with Cer1p, while partially purified Cer1p is able to bind directly to peptides. Together, this suggests that Cer1p has a chaperoning activity required for proper refolding of denatured pro-CPY which is mediated by direct interaction with the unfolded polypeptide. Cer1p peptide binding and oligomerization could be disrupted by addition of ATP, confirming that Cer1p possesses a functional ATP binding site, much like Kar2p and other members of the hsp70 family. Interestingly, replacing the signal sequence of a CER1-dependent protein with that of a CER1-independent protein did not relieve the requirement of CER1 for import. This result suggests that an interaction with the mature portion of the protein also is important for the translocation role of Cer1p. The CER1 RNA levels increase at lower temperatures. In addition, the effects of deletion on folding and translocation are more severe at lower temperatures. Therefore, these results suggest that Cer1p provides an additional chaperoning activity in processes known to require Kar2p. However, there appears to be a greater requirement for Cer1p chaperone activity at lower temperatures.