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Hsp90 is required for the normal activity of steroid receptors, and in steroid receptor complexes it is typically bound to one of the immunophilin-related co-chaperones: the peptidylprolyl isomerases FKBP51, FKBP52 or CyP40, or the protein phosphatase PP5. The physiological roles of the immunophilins in regulating steroid receptor function have not been well defined, and so we examined in vivo the influences of immunophilins on hormone-dependent gene activation in the Saccharomyces cerevisiae model for glucocorticoid receptor (GR) function. FKBP52 selectively potentiates hormone-dependent reporter gene activation by as much as 20-fold at limiting hormone concentrations, and this potentiation is readily blocked by co-expression of the closely related FKBP51. The mechanism for potentiation is an increase in GR hormone-binding affinity that requires both the Hsp90-binding ability and the prolyl isomerase activity of FKBP52.