In the eukaryotic cytosol, Hsp70 and Hsp90 cooperate with various co-chaperone proteins in the folding of a growing set of substrates, including the glucocorticoid receptor (GR). Here, we analyse the function of the co-chaperone Tpr2, which contains two chaperone-binding TPR domains and a DnaJ homologous J domain. In vivo, an increase or decrease in Tpr2 expression reduces GR activation, suggesting that Tpr2 is required at a narrowly defined expression level. As shown in vitro, Tpr2 recognizes both Hsp70 and Hsp90 through its TPR domains, and its J domain stimulates ATP hydrolysis and polypeptide binding by Hsp70. Furthermore, unlike other co-chaperones, Tpr2 induces ATP-independent dissociation of Hsp90 but not of Hsp70 from chaperone–substrate complexes. Excess Tpr2 inhibits the Hsp90-dependent folding of GR in cell lysates. We propose a novel mechanism in which Tpr2 mediates the retrograde transfer of substrates from Hsp90 onto Hsp70. At normal levels substoichiometric to Hsp90 and Hsp70, this activity optimizes the function of the multichaperone machinery.