We have isolated a new type of ATP-dependent protease from Escherichia coli. It is the product of the heat-shock locus hslVU that encodes two proteins: HslV, a 19-kDa protein similar to proteasome beta subunits, and HslU, 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 HslV and HslU from a high copy plasmid. Although HslV and HslU could be coimmunoprecipitated from cell extracts of both strains with an anti-HslV 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 nonhydrolyzable ATP analog, ADP, or AMP had no effect. Peptidase activity was blocked by the anti-HslV 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 HslVU 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, HslV and HslU appear to form a complex in which ATP hydrolysis by HslU is essential for peptide hydrolysis by the proteasome-like component HslV.