Members of the AAA family of ATPases have been implicated in chaperone-like activities. We used the archaeal Cdc48/p97 homologue VAT as a model system to investigate the effect of an AAA protein on the folding and unfolding of two well-studied, heterologous substrates, cyclophilin and penicillinase. We found that, depending on the Mg2+ concentration, VAT assumes two states with maximum rates of ATP hydrolysis that differ by an order of magnitude. In the low-activity state, VAT accelerated the refolding of penicillinase, whereas in the high-activity state, it accelerated its unfolding. Both reactions were ATP-dependent. In its interaction with cyclophilin, VAT was ATP-independent and only promoted refolding. The N-terminal domain of VAT, which lacks ATPase activity, also accelerated the refolding of cyclophilin but showed no effect on penicillinase. VAT appears to be structurally equivalent over its entire length to Sec18/NSF, suggesting that these results apply more broadly to group II AAA proteins.