Mutations in the Escherichia coli heat shock genes, dnaK, dnaJ or grpE, alter host DNA and RNA synthesis, degradation of other proteins, cell division and expression of other heat shock genes. They also block the initiation of DNA replication of bacteriophages <latex>$\lambda $</latex> and P1, and the mini-F plasmid. An in vitro <latex>$\lambda $</latex>DNA replication system, composed entirely of purified components, enabled us to describe the molecular mechanism of the dnaK, dnaJ and grpE gene products. DnaK, the bacterial hsp 70 homologue, releases <latex>$\lambda $</latex>P protein from the preprimosomal complex in an ATP- and DnaJ-dependent reaction (GrpE-independent initiation of <latex>$\lambda $</latex>DNA replication). In this paper, I show that, when GrpE is present, <latex>$\lambda $</latex>P protein is not released from the preprimosomal complex, rather it is translocated within the complex in such a way that it does not inhibit DnaB helicase activity. Translocation of <latex>$\lambda $</latex>P triggers the initiation event allowing DnaB helicase to unwind DNA near the ori<latex>$\lambda $</latex> sequence, leading to efficient <latex>$\lambda $</latex>DNA replication. Chaperone activity of the DnaK-DnaJ-GrpE system is first manifested in the selective binding of these heat shock proteins to the preprimosomal complex, followed by its ATP-dependent rearrangement. I show that DnaJ not only tags the preprimosomal complex for recognition by DnaK, but also stabilizes the multi-protein structure. GrpE also participates in the binding of DnaK to the preprimosomal complex by increasing DnaK's affinity to those <latex>$\lambda $</latex>P proteins which are already associated with DnaJ. After attracting DnaK to the preprimosomal complex, DnaJ and GrpE stimulate the ATPase activity of DnaK, triggering conformational changes in DnaK which are responsible for the rearrangement of proteins in the preprimosomal complex and recycling of these heat shock proteins. The role of DnaK, DnaJ and GrpE in <latex>$\lambda $</latex>DNA replication is in sharp contrast to our understanding of their role in the oriC, P1, and probably mini-F DNA replication systems. In the cases of oriC and P1 DNA replication, these heat shock proteins activate initiation factors before they are in contact with DNA, and are not required during the subsequent steps leading to the initiation of DNA replication. The common feature of DnaK, DnaJ and GrpE action in these systems is their ATP-dependent disaggregation or rearrangement of protein complexes formed before or during initiation of DNA replication.