Two-component systems, composed of a homodimeric histidine kinase (HK) and a response regulator (RR), are major signal transduction devices in bacteria. Typically the signal triggers HK autophosphorylation at one His residue, followed by phosphoryl transfer from the phospho-His to an Asp residue in the RR. Signal extinction frequently involves phospho-RR dephosphorylation by a phosphatase activity of the HK. Our understanding of these reactions and of the determinants of partner specificity among HK–RR couples has been greatly increased by recent crystal structures and biochemical experiments on HK–RR complexes. Cis-autophosphorylation (one subunit phosphorylates itself) occurs in some HKs while trans-autophosphorylation takes place in others. We review and integrate this new information, discuss the mechanism of the three reactions and propose a model for transmembrane signaling by these systems.