The C-terminal domain of Hsp90 displays independent chaperone activity, mediates dimerization, and contains the MEEVD motif essential for interaction with tetratricopeptide repeat-containing immunophilin cochaperones assembled in mature steroid receptor complexes. An alpha-helical region, upstream of the MEEVD peptide, helps form the dimerization interface and includes a hydrophobic microdomain that contributes to the Hsp90 interaction with the immunophilin cochaperones and corresponds to the binding site for novobiocin, a coumarin-related Hsp90 inhibitor. Mutation of selected residues within the hydrophobic microdomain significantly impacted the chaperone function of a recombinant C-terminal Hsp90 fragment and novobiocin inhibited wild-type chaperone activity. Prior incubation of the Hsp90 fragment with novobiocin led to a direct blockade of immunophilin cochaperone binding. However, the drug had little influence on the pre-formed Hsp90-immunophilin complex, suggesting that bound cochaperones mask the novobiocin-binding site. We observed a differential effect of the drug on Hsp90-immunophilin interaction, suggesting that the immunophilins make distinct contacts within the C-terminal domain to specifically modulate Hsp90 function. Novobiocin also precluded the interaction of full-length Hsp90 with the p50(cdc37) cochaperone, which targets the N-terminal nucleotide-binding domain, and is prevalent in Hsp90 complexes with protein kinase substrates. Novobiocin therefore acts locally and allosterically to induce conformational changes within multiple regions of the Hsp90 protein. We provide evidence that coumermycin A1, a coumarin structurally related to novobiocin, interferes with dimerization of the Hsp90 C-terminal domain. Coumarin-based inhibitors then may antagonize Hsp90 function by inducing a conformation favoring separation of the C-terminal domains and release of substrate.