Hsp31, the Escherichia coli hcha gene product, is a molecular chaperone whose activity is inhibited by ATP at high temperature. Its crystal structure reveals a putative Cys184, His185, and Asp213 catalytic triad similar to that of the Pyrococcus horikoshii protease PH1704, suggesting that it should display a proteolytic activity. A preliminary report has shown that Hsp31 has an exceedingly weak proteolytic activity toward bovine serum albumin and a peptidase activity toward two peptide substrates with small amino acids at their N terminus (alanine or glycine), but the physiological significance of this observation, remains unclear. In this study, we report that Hsp31 does not diplay any significant proteolytic activity but has peptidolytic activity. The aminopeptidase cleavage preference of Hsp31 is Ala > Lys > Arg > His, suggesting that Hsp 31 is an aminopeptidase of broad specificity. Its aminopeptidase activity is inhibited by the thiol reagent iodoacetamide and is completely abolished in a C185A mutant, which is consistent with Hsp31 being a cysteine peptidase. The aminopeptidase activity of Hsp31 is also inhibited by EDTA and 1,10-phenanthroline, in concordance with the importance of the putative His85, His122, and Glu90 metal-binding site revealed by crystallographic studies. An Hsp31-deficient mutant accumulates more 8-12-mer peptides than its parental strain, and purified Hsp31 can transform these peptides into smaller peptides, suggesting that Hsp31 has an important peptidase function both in vivo and in vitro. Proteins interacting with Hsp31 have been identified by reverse purification of a crude E. coli extract on an Hsp31-affinity column, followed by SDS-polyacrylamide electrophoresis and mass spectrometry. The ClpA component of the ClpAP protease, the chaperone GroEL, elongation factor EF-Tu, and tryptophanase were all found to interact with Hsp31, thus substantiating the role of Hsp31 as both chaperone and peptidase.