The molecular chaperone protein Hsp78, a member of the Clp/Hsp100 family localized in the mitochondria of Saccharomyces cerevisiae, is required for maintenance of mitochondrial functions under heat stress. To characterize the biochemical mechanisms of Hsp78 function, Hsp78 was purified to homogeneity and its role in the reactivation of chemically and heat-denatured substrate protein was analyzed in vitro. Hsp78 alone was not able to mediate reactivation of firefly luciferase. Rather, efficient refolding was dependent on the simultaneous presence of Hsp78 and the mitochondrial Hsp70 machinery, composed of Ssc1p/Mdj1p/Mge1p. Bacterial DnaK/DnaJ/GrpE, which cooperates with the Hsp78 homolog, ClpB in Escherichia coli, could not substitute for the mitochondrial Hsp70 system. However, efficient Hsp78-dependent refolding of luciferase was observed if DnaK was replaced by Ssc1p in these experiments, suggesting a specific functional interaction of both chaperone proteins. These findings establish the cooperation of Hsp78 with the Hsp70 machinery in the refolding of heat-inactivated proteins and demonstrate a conserved mode of action of ClpB homologs.