Mammalian BiP/GRP78 and Escherichia coli DnaK belong to the highly conserved hsp70 family and function as molecular chaperones in the endoplasmic reticulum or the cytosol, respectively. Induction of murine BiP/GRP78 expression in E. coli leads to growth arrest and cell death, independent of the bacterial strain and vector used. Analysis of various BiP constructs and mutants shows that the dominant-lethal phenotype is induced specifically by the expression of the 13.7-kDa C-terminal domain and abolished by a single substitution in that region, Deletion of that region also results in nontoxic gene products that can be overexpressed and purified to homogeneity. The nontoxic mutants are highly expressed in E. coli, representing up to 20% of the soluble fraction. They are catalytically active, depolymerize upon binding ATP or synthetic peptide, and interact with the J-domain of the DnaJ-like accessory protein, MTJ1, with near wild-type affinity. Our data indicate that the cytotoxic effect encountered during overexpression of recombinant proteins can be caused by a single domain and can be alleviated by a specific mutation or deletion in that region without altering the catalytic properties of the enzyme.