DnaK, a major Hsp70 molecular chaperones in Escherichia coli, is a widely used model for studying Hsp70s. We recently solved a crystal structure of DnaK in complex with ATP and showed that DnaK was packed as a dimer in the crystal structure. Our previous biochemical studies supported the formation of a specific DnaK dimer as observed in the crystal structure in solution in the presence of ATP and suggested an important role of this dimer in efficient interaction with Hsp40 co-chaperones. In this study, we dissected the biochemical properties of this DnaK dimer. To restrict DnaK in this dimer form, we mutated two residues on the dimer interface to cysteine, A303C, and H541C. Upon oxidation, this DnaK-A303C-H541C protein formed a specific dimer linked by disulfide bonds formed between A303C and H541C only in the presence of ATP, consistent with the crystal structure. Intriguingly, this disulfide-bond-linked dimer of DnaK-A303C-H541C has reduced ATPase activity and decreased affinity for peptide substrate. More interestingly, unlike wild-type DnaK, the peptide substrate-binding kinetics of this dimer is drastically accelerated even in the absence of ATP, suggesting this dimer is restricted in an ATP-bound conformation regardless of nucleotide bound, which was further supported by our analysis using tryptophan fluorescence and ATP-induced peptide release. Thus, formation of the dimer restricted DnaK in an ATP-bound state and blocked the progression through the chaperone cycle. Productive progression through the chaperone cycle requires the dissociation of this transient dimer. Surprisingly, a significantly compromised interaction with Hsp40 co-chaperone was observed for this disulfide-bond-linked dimer. Thus, dissociation of this DnaK dimer is equally crucial for efficient Hsp40 interaction. An initial interaction between Hsp70 and Hsp40 requires the formation of DnaK dimer; but a stable Hsp70-Hsp40 interaction may follow the dissociation of the dimer.