Folding and cellular localization of many proteins of Gram-negative bacteria rely on a network of chaperones and secretion systems. Among them is the lipase-specific foldase Lif, a membrane-bound steric chaperone that tightly binds (K D = 29 nM) and mediates folding of the lipase LipA, a virulence factor of the pathogenic bacterium P. aeruginosa. Lif consists of five-domains, including a mini domain MD1 essential for LipA folding. However, the molecular mechanism of Lif-assisted LipA folding remains elusive. Here, we show in in vitro experiments using a soluble form of Lif (sLif) that isolated MD1 inhibits sLif-assisted LipA activation. Furthermore, the ability to activate LipA is lost in the variant sLif Y99A , in which the evolutionary conserved amino acid Y99 from helix α1 of MD1 is mutated to alanine. This coincides with an approximately threefold reduced affinity of the variant to LipA together with increased flexibility of sLif Y99A in the complex as determined by polarization-resolved fluorescence spectroscopy. We have solved the NMR solution structures of P. aeruginosa MD1 and variant MD1 Y99A revealing a similar fold indicating that a structural modification is likely not the reason for the impaired activity of variant sLif Y99A. Molecular dynamics simulations of the sLif:LipA complex in connection with rigidity analyses suggest a long-range network of interactions spanning from Y99 of sLif to the active site of LipA, which might be essential for LipA activation. These findings provide important details about the putative mechanism for LipA activation and point to a general mechanism of protein folding by multi-domain steric chaperones. The Gram-negative human pathogen Pseudomonas aeruginosa produces a wide range of extracellular enzymes 1,2 , among them the lipase LipA, a secreted putative virulence factor 3-5. For its conversion into an enzymatically active conformation, LipA requires the assistance of an inner membrane-bound chaperone named lipase-specific foldase (Lif) 6. On the folding pathway, LipA can adopt several structurally different intermediates: an inactive and unfolded molten globule-like conformation 7 , a near-natively folded pre-active conformation 8 and two folded conformations that differ in the structure of the α-helical lid covering the active site, with the folded closed