The 97-kDa molecular chaperone valosin-containing protein (VCP) belongs to a highly conserved AAA family, and forms a hexameric structure which is essential for its biological functions. The AAA domain contains highly conserved motifs, the Walker A, Walker B, and the second region of homology (SRH). While Walker A and B motifs mediate ATP binding and hydrolysis, respectively, the function of the SRH in VCP is not clear. We examined the significance of the SRH in VCP, especially the conserved Arg359 and Arg362 in the first AAA domain, D1, and Arg635 and Arg638 in the second AAA domain, D2. We show that Arg-359 and 362 in D1 are critical for maintaining the hexameric structure and the ability to bind the poly-ubiquitin chains. Although the rest of the tested SRH mutants retain the hexameric structure, all of them exhibit severely reduced ATPase activity. Tryptophan fluorescence analysis showed that all the tested mutants can bind to ATP or ADP. Thus the reduced ATPase activity likely results from the hampered communications among protomers during hydrolysis. Moreover, when the ATPase-defective mutant R635A or R638A is mixed with the Walker A mutant of D2, the ATPase activity is partially restored, suggesting that Arg-635 and 638 can stimulate the ATPase activity of the neighboring protomer. Interestingly, mutation of Arg-359 and 362 uncouples the inhibitory effect of p47, a VCP cofactor, on the ATPase activity of VCP. Therefore, the Arg residues allow D1 to take on a specific conformation which is required for substrate binding and cofactor communications. Taken together, these results demonstrate that the conserved Arg residues in the SRH of both D1 and D2 play critical roles in communicating the conformational changes required for ATP hydrolysis, and SRH in D1 also contributes to substrate binding and cofactor communications.