Expression of the human beta-amyloid peptide (Abeta) in a transgenic Caenorhabditis elegans Alzheimer disease model leads to the induction of HSP-16 proteins, a family of small heat shock-inducible proteins homologous to vertebrate alphaB crystallin. These proteins also co-localize and co-immunoprecipitate with Abeta in this model (Fonte, V., Kapulkin, V., Taft, A., Fluet, A., Friedman, D., and Link, C. D. (2002) Proc. Natl. Acad. Sci. U. S. A. 99, 9439-9444). To investigate the molecular basis and biological function of this interaction between HSP-16 and Abeta, we generated transgenic C. elegans animals with high level, constitutive expression of HSP-16.2. We find that constitutive expression of wild type, but not mutant, HSP-16.2 partially suppresses Abeta toxicity. Wild type Abeta-(1-42), but not Abeta single chain dimer, was observed to become sequestered in HSP-16.2-containing inclusions, indicating a conformation-dependent interaction between HSP-16.2 and Abeta in vivo. Constitutive expression of HSP-16.2 could reduce amyloid fibril formation, but it did not reduce the overall accumulation of Abeta peptide or alter the pattern of the predominant oligomeric species. Studies with recombinant HSP-16.2 demonstrated that HSP-16.2 can bind directly to Abeta in vitro, with a preferential affinity for oligomeric Abeta species. This interaction between Abeta and HSP-16.2 also influences the formation of Abeta oligomers in in vitro assays. These studies are consistent with a model in which small chaperone proteins reduce Abeta toxicity by interacting directly with the Abeta peptide and altering its oligomerization pathways, thereby reducing the formation of a minor toxic species.