The Hsp90 family of chaperones requires ATP-driven cycling to perform their function. The presence of two bound ATP molecules is known to favor a closed conformation of the Hsp90 dimer. However, the structural and mechanistic consequences of subsequent ATP hydrolysis are poorly understood. Using single-molecule FRET, we discover novel dynamic behavior in the closed state of Grp94, the Hsp90 family member resident in the endoplasmic reticulum. Under ATP turnover conditions, Grp94 populates two distinct closed states, a relatively static ATP/ATP closed state that adopts one conformation, and a dynamic ATP/ADP closed state that can adopt two conformations. We constructed a Grp94 heterodimer with one arm that is catalytically dead, to extend the lifetime of the ATP/ADP state by preventing hydrolysis of the second ATP. This construct shows prolonged periods of cycling between two closed conformations. Our results enable a quantitative description of how ATP hydrolysis influences Grp94, where sequential ATP hydrolysis steps allow Grp94 to transition between closed states with different dynamic and structural properties. This stepwise transitioning of Grp94's dynamic properties may provide a mechanism to propagate structural changes to a bound client protein.