We examined the effect of deletion of different segments in the helical subdomain (the so-called "lid") of the DnaK peptide-binding domain on peptide binding and protein stability. At 25 degrees C, wt DnaK and the deletion mutant proteins are able to stably bind peptides with similar affinity. However, at physiological (37 degrees C) and stress (42 degrees C) temperatures, removal of the N-terminal half of alphaB and the rest of the lid drastically decreases the ability of the protein to bind substrates. Differential scanning calorimetry and infrared spectroscopy show that this behavior is accompanied by destabilization of the peptide-binding domain. Our data suggest that the reversible interaction between the lid and beta-sandwich subdomains of DnaK peptide-binding domain is required for the stabilization of the loops that form the peptide-binding site, which in turn modulates the protein affinity for peptide substrates. This interaction might have functional implications because it could prevent rebinding of the peptide substrate, which would be forced to fold.