The assembly of different types of virulence-associated surface fibers called pili in Gram-negative bacteria requires periplasmic chaperones. PapD is the prototype member of the periplasmic chaperone family, and the structural basis of its interactions with pilus subunits was investigated. Peptides corresponding to the carboxyl terminus of pilus subunits bound PapD and blocked the ability of PapD to bind to the pilus adhesin PapG in vitro. The crystal structure of PapD complexed to the PapG carboxyl-terminal peptide was determined to 3.0 A resolution. The peptide bound in an extended conformation with its carboxyl terminus anchored in the interdomain cleft of the chaperone via hydrogen bonds to invariant chaperone residues Arg8 and Lys112. Main chain hydrogen bonds and contacts between hydrophobic residues in the peptide and the chaperone stabilized the complex and may play a role in determining binding specificity. Site-directed mutations in Arg8 and Lys112 abolished the ability of PapD to bind pilus subunits and mediate pilus assembly in vivo, an indication that the PapD-peptide crystal structure is a reflection of at least part of the PapD-subunit interaction.