The in vitro protein folding activity of an FKBP (FK506 binding protein, abbreviated to MTFK) from a thermophilic archaeon, Methanococcus thermolithotrophicus, was investigated. MTFK exhibited FK506 sensitive PPIase (peptidyl prolyl cis-trans isomerase) activity which accelerated the speed of ribonuclease T1 refolding, which is rate-limited by isomerization of two prolyl peptide bonds. In addition, MTFK suppressed the aggregation of folding intermediates and elevated the final yield of rhodanese refolding. We called this activity of MTFK the chaperone activity. The chaperone activity of MTFK was also inhibited by FK506. Alignment of the amino acid sequences of MTFK with human FKBP12 showed that MTFK has two insertion sequences, consisting of 13 and 44 amino acids, at the N- and C-termini, respectively [Furutani, M., Iida, T., Yamano, S., Kamino, K., and Maruyama, T. (1998) J. Bacteriol. 180, 388-394]. To study the relationship between chaperone and PPIase activities of MTFK, mutant MTFKs with deletions of these insertion sequences or with amino acid substitutions were created. Their PPIase and chaperone activities were measured using a synthetic oligopeptide and denatured rhodanese as the substrates, respectively. The far-UV circular dichroism spectra of the wild type and the mutants were also analyzed. The results suggested that (1) the PPIase activity did not correlate with chaperone activity, (2) both insertion sequences were required for MTFK to take a proper conformation, and (3) the insertion sequence (44 amino acids) in the C-terminus was important for the chaperone activity.