The tau subunit of Escherichia coli DNA polymerase III holoenzyme interacts with the alpha subunit through its C-terminal Domain V, tau(C)16. We show that the extreme C-terminal region of tau(C)16 constitutes the site of interaction with alpha. The tau(C)16 domain, but not a derivative of it with a C-terminal deletion of seven residues (tau(C)16Delta7), forms an isolable complex with alpha. Surface plasmon resonance measurements were used to determine the dissociation constant (K(D)) of the alpha-tau(C)16 complex to be approximately 260 pM. Competition with immobilized tau(C)16 by tau(C)16 derivatives for binding to alpha gave values of K(D) of 7 muM for the alpha-tau(C)16Delta7 complex. Low-level expression of the genes encoding tau(C)16 and tau(C)16triangle up7, but not tau(C)16Delta11, is lethal to E. coli. Suppression of this lethal phenotype enabled selection of mutations in the 3' end of the tau(C)16 gene, that led to defects in alpha binding. The data suggest that the unstructured C-terminus of tau becomes folded into a helix-loop-helix in its complex with alpha. An N-terminally extended construct, tau(C)24, was found to bind DNA in a salt-sensitive manner while no binding was observed for tau(C)16, suggesting that the processivity switch of the replisome functionally involves Domain IV of tau.