The heat shock protein (Hsp) 70/Hsp40 chaperone system plays an essential role in cell physiology, but few of its in vivo functions are known. We report that biogenesis of Axl1p, an insulinase-like endoprotease from yeast, is dependent upon the cytosolic Hsp40 protein Ydj1p. Axl1 is responsible for cleavage of the P2 processing intermediate of pro-a-factor, a mating pheromone, to its mature form. Mutant ydj1 strains exhibited a severe mating defect, which correlated with a 90% reduction in a-factor secretion. Reduced levels of a-factor export were caused by defects in the endoproteolytic processing of P2, which led to its intracellular accumulation. Defective P2 processing correlated with the reduction in the steady state level of active Axl1p. Two mechanisms were uncovered to explain why Axl1p activity was diminished in ydj1 strains. First, AXL1 mRNA levels were reduced ydj1 strains. Second, the half-life of newly synthesized Axl1p was greatly diminished in ydj1 strains. Collectively, these data indicate Ydj1p functions to promote AXL1 mRNA accumulation and in addition appears to facilitate the proper folding of nascent Axl1p. This study is the first to suggest a role for Ydj1p in RNA metabolism and identifies Axl1p as an in vivo substrate of the Hsp70/Ydj1p chaperone system.