Structure–function analysis of DegP revealed a novel mechanism for protease and chaperone regulation. Binding of unfolded proteins induces the oligomer reassembly from the resting hexamer (DegP6) into the functional protease–chaperone DegP12/24. The newly formed cage exhibits the characteristics of a proteolytic folding chamber, shredding those proteins that are severely misfolded while stabilizing and protecting proteins present in their native state. Isolation of native DegP complexes with folded outer membrane proteins (OMPs) highlights the importance of DegP in OMP biogenesis. The encapsulated OMP β-barrel is significantly stabilized in the hydrophobic chamber of DegP12/24 and thus DegP seems to employ a reciprocal mechanism to those chaperones assisting the folding of water soluble proteins via polar interactions. In addition, we discuss in this review similarities to other complex proteolytic machines that, like DegP, are under control of a substrate-induced or stress-induced oligomer conversion.