MutLalpha, a heterodimer composed of Mlh1 and Pms2, is the major MutL activity in mammalian DNA mismatch repair. Highly conserved motifs in the N termini of both subunits predict that the protein is an ATPase. To study the significance of these motifs to mismatch repair, we have expressed in insect cells wild type human MutLalpha and forms altered in conserved glutamic acid residues, predicted to catalyze ATP hydrolysis of Mlh1, Pms2, or both. Using an in vitro assay, we showed that MutLalpha proteins altered in either glutamic acid residue were each partially defective in mismatch repair, whereas the double mutant showed no detectable mismatch repair. Neither strand specificity nor directionality of repair was affected in the single mutant proteins. Limited proteolysis studies of MutLalpha demonstrated that both Mlh1 and Pms2 N-terminal domains undergo ATP-induced conformational changes, but the extent of the conformational change for Mlh1 was more apparent than for Pms2. Furthermore, Mlh1 was protected at lower ATP concentrations than Pms2, suggesting Mlh1 binds ATP with higher affinity. These findings imply that ATP hydrolysis is required for MutLalpha activity in mismatch repair and that this activity is associated with differential conformational changes in Mlh1 and Pms2.