Hsp70s are a ubiquitous family of molecular chaperones involved in many cellular processes. Two Hsp70s, Lhs1p and Kar2p, are required for protein biogenesis in the yeast endoplasmic reticulum. Here, we found that Lhs1p and Kar2p specifically interacted to couple, and coordinately regulate, their respective activities. Lhs1p stimulated Kar2p by providing a specific nucleotide exchange activity, whereas Kar2p reciprocally activated the Lhs1p adenosine triphosphatase (ATPase). The two ATPase activities are coupled, and their coordinated regulation is essential for normal function in vivo.