Mutations in the gene coding for DJ-1 protein lead to early-onset recessive forms of Parkinson's disease. It is believed that loss of DJ-1 function is causative for disease, although the function of DJ-1 still remains a matter of controversy. We show that DJ-1 is localized in the cytosol and is associated with membranes and organelles in the form of homodimers. The disease-related mutation L166P shifts its subcellular distribution to the nucleus and decreases its ability to dimerize, impairing cell survival. Using an intracellular foldase biosensor, we found that wild-type DJ-1 possesses chaperone activity, which is abolished by the L166P mutation. We observed that this aberrant phenotype can be reversed by the expression of the cochaperone BAG1 (Bcl-2-associated athanogene 1), restoring DJ-1 subcellular distribution, dimer formation, and chaperone activity and ameliorating cell survival.