The heat shock protein hsp70/hsc70 is a required component of a five-protein (hsp90, hsp70, Hop, hsp40, and p23) minimal chaperone system reconstituted from reticulocyte lysate that forms glucocorticoid receptor (GR).hsp90 heterocomplexes. BAG-1 is a cofactor that binds to the ATPase domain of hsp70/hsc70 and that modulates its chaperone activity. Inasmuch as BAG-1 has been found in association with several members of the steroid receptor family, we have examined the effect of BAG-1 on GR folding and GR.hsp90 heterocomplex assembly. BAG-1 was present in reticulocyte lysate at a BAG-1:hsp70/hsc70 molar ratio of approximately 0.03, and its elimination by immunoadsorption did not affect GR folding and GR. hsp90 heterocomplex assembly. At low BAG-1:hsp70/hsc70 ratios, BAG-1 promoted the release of Hop from the hsp90-based chaperone system without inhibiting GR.hsp90 heterocomplex assembly. However, at molar ratios approaching stoichiometry with hsp70, BAG-1 produced a concentration-dependent inhibition of GR folding to the steroid-binding form with corresponding inhibition of GR.hsp90 heterocomplex assembly by the minimal five-protein chaperone system. Also, there was decreased steroid-binding activity in cells that were transiently or stably transfected with BAG-1. These observations suggest that, at physiological concentrations, BAG-1 modulates assembly by promoting Hop release from the assembly complex; but, at concentrations closer to those in transfected cells and some transformed cell lines, hsp70 is continuously bound by BAG-1, and heterocomplex assembly is blocked.