The molecular machinery of the cyanobacterial circadian clock consists of three proteins, KaiA, KaiB, and KaiC. The three Kai proteins interact with each other and generate circadian oscillations in vitro in the presence of ATP (an in vitro KaiABC clock system). KaiB consists of four subunits organized as a dimer of dimers, and its overall shape is that of an elongated hexagonal plate with a positively charged cleft flanked by two negatively charged ridges. We found that a mutant KaiB with a C-terminal deletion (KaiB(1-94)), which lacks the negatively charged ridges, was a dimer. Despite its dimeric structure, KaiB(1-94) interacted with KaiC and generated normal circadian oscillations in the in vitro KaiABC clock system. KaiB(1-94) also generated circadian oscillations in cyanobacterial cells, but they were weak, indicating that the C-terminal region and tetrameric structure of KaiB are necessary for the generation of normal gene expression rhythms in vivo. KaiB(1-94) showed the highest affinity for KaiC among the KaiC-binding proteins we examined and inhibited KaiC from forming a complex with SasA, which is involved in the main output pathway from the KaiABC clock oscillator in transcription regulation. This defect explains the mechanism underlying the lack of normal gene expression rhythms in cells expressing KaiB(1-94).