We have isolated a new type of ATP-dependent protease from Escherichia coli, It is the product of the heat-shock Locus hsIVU that encodes two proteins: HsIV, a 19-kDa protein similar to proteasome beta subunits, and HsIU, a 50-kDa protein related to the ATPase ClpX. In the presence of ATP, the protease hydrolyzes rapidly the fluorogenic peptide Z-Gly-Gly-Leu-AMC and very slowly certain other chymotrypsin substrates, This activity increased 10-fold in E. coli expressing heat-shock proteins constitutively and 100-fold in cells expressing HsIV and BsIU from a high copy plasmid. Although HsIV and HsIU could be coimmunoprecipitated from cell extracts of both strains with an anti-HSIV antibody, these two components were readily separated by various types of chromatography. ATP stimulated peptidase activity up to 150-fold, whereas other nucleoside triphosphates, a nonhydrolzable ATP analog, ADP, or AMP had no effect. Peptidase activity was blocked by the anti-HsIV antibody and by several types of inhibitors of the eukaryotic proteasome (a threonine protease) but not by inhibitors of other classes of proteases, Unlike eukaryotic proteasomes, the HsIVU protease lacked tryptic-like and peptidyl-glutamyl-peptidase activities. Electron micrographs reveal ring-shaped particles similar to en face images of the 20S proteasome or the ClpAP protease. Thus, HsIV and HsIU appear to form a complex in which ATP hydrolysis by HsIU is essential for peptide hydrolysis bg,the proteasome-like component HsIV.