Cochaperones are essential for Hsp70- and Hsc70-mediated folding of proteins and include nucleotide-exchange factors (NEFs) that assist protein folding by accelerating ADP-ATP exchange on Hsp70. The cochaperone Bag2 binds misfolded Hsp70 clients and also acts as an NEF, but the molecular basis for its function is unclear. We show that, rather than being a member of the Bag domain family, Bag2 contains a new type of Hsp70 NEF domain, which we call the 'brand new bag' (BNB) domain. Free and Hsc70-bound crystal structures of Bag2-BNB show its dimeric structure, in which a flanking linker helix and loop bind to Hsc70 to promote nucleotide exchange. NMR analysis demonstrates that the client binding sites and Hsc70-interaction sites of the Bag2-BNB overlap, and that Hsc70 can displace clients from Bag2-BNB, indicating a distinct mechanism for the regulation of Hsp70-mediated protein folding by Bag2.