Steroid hormone receptors contain a conserved sequence of amino acids within the steroid binding domain, and we have previously speculated that this conserved region is the site of interaction of the glucocorticoid receptor with hsp90 (Danielsen, M., Northrop, J. P., and Ringold, G. M. (1986) EMBO J. 5, 2513-2522; Pratt, W. B., Jolly, D. J., Pratt, D. V., Hollenberg, S. M., Giguere, V., Cadepond, F. M., Schweizer-Groyer, G., Catelli, M.-G., Evans, R. M., and Baulieu, E.-E. (1988) J. Biol. Chem. 263, 267-273). In this work, we transfect COS-7 cells with three mutants of the mouse glucocorticoid receptor deleted for all or part of this conserved region. The mutant receptor missing the entire conserved region is very unstable and is found predominantly as cleavage products. Approximately one-third of the cleavage products have lost most or all of the steroid binding domain. This mutant receptor has a constitutive activity that is about one-third that of the steroid-bound wild type receptor in stimulating transcription from a reporter gene. We propose that the partial constitutive activity results from proteolytic cleavage of the steroid binding domain from the rest of the receptor, thus removing the functional repression determined by this domain. This mutant receptor is associated with hsp90 in cytosols prepared in the presence of molybdate but, when molybdate is not present, the receptor is unstable and there is very little receptor-associated hsp90. This observation is consistent with the proposal that binding of hsp90 helps to stabilize the glucocorticoid receptor against proteolysis, and it demonstrates that the site of molybdate interaction with the receptor lies outside of the conserved sequence. Our data are interpreted according to a two-site model in which hsp90 interacts with the steroid binding domain at two sites. One site is in the conserved sequence, and the other is at a transition metal oxyanion binding site, located between the conserved sequence and the COOH terminus.