The cellular stress response protein GADD34 mediates growth arrest and apoptosis in response to DNA damage, negative growth signals, and protein malfolding. GADD34 binds to protein phosphatase PP1 and can attenuate the translational elongation of key transcriptional factors through dephosphorylation of eukaryotic initiation factor 2alpha (eIF2alpha). Recently, we reported the involvement of human SNF5/INI1 (hSNF5/INI1) protein in the functions of GADD34 and showed that hSNF5/INI1 binds GADD34 and stimulates the bound PP1 phosphatase activity. To better understand the regulatory and functional mechanisms of GADD34, we undertook a yeast two-hybrid screen with full-length GADD34 as bait in order to identify additional protein partners of GADD34. We report here that human cochaperone protein BAG-1 interacts with GADD34 in vitro and in SW480 cells treated with the proteasome inhibitor z-LLL-B to induce apoptosis. Two other proteins, Hsp70/Hsc70 and PP1, associate reversibly with the GADD34-BAG-1 complex, and their dissociation is promoted by ATP. BAG-1 negatively modulates GADD34-bound PP1 activity, and the expression of BAG-1 isoforms can also mask GADD34-mediated inhibition of colony formation and suppression of transcription. Our findings suggest that BAG-1 may function to suppress the GADD34-mediated cellular stress response and support a role for BAG-1 in the survival of cells undergoing stress.