The 70-kDa heat shock proteins (hsp70s) function as molecular chaperones in a wide variety of cellular processes through cycles of binding and release from substrate proteins coupled to cycles of ATP hydrolysis. In the prokaryote Escherichia coli, the hsp70 DnaK functions with two other proteins, DnaJ and GrpE, which modulate the activity of DnaK. While numerous hsp70s and DnaJ-related proteins have been identified in eukaryotes, to our knowledge no GrpE-related proteins have been reported. We report the isolation and characterization of a eukaryotic grpE-related gene, MGE1. MGE1, an essential nuclear gene of the yeast Saccharomyces cerevisiae, encodes a soluble protein of the mitochondrial matrix. Cells with reduced expression of Mge1p accumulate the precursor form of a mitochondrial protein. Since mitochondrial hsp70 is required for translocation of precursors of mitochondrial proteins from the cytosol into the matrix of mitochondria, these data suggest that Mge1p acts in concert with mitochondrial hsp70 in protein translocation.