We have identified a gene that acts in trans to activate the expression of the phenazine biosynthetic genes in the biological control organism Pseudomonas aureofaciens 30-84. This gene, phzR (phenazine regulator), is located upstream of and divergently transcribed from the phenazine biosynthetic genes. Thus, the phenazine biosynthetic locus consists of at least two divergently transcribed operons. A functional phzR gene is required for phenazine production. The nucleotide sequence of phzR revealed an open reading frame of 723 nucleotides encoding a protein of ca. 27 kDa. The predicted amino acid sequence of PhzR has homology with other bacterial positive transcriptional activators, including LasR of Pseudomonas aeruginosa, LuxR of Vibrio fischerii, and TraR of Agrobacterium tumefaciens. The addition of cell-free supernatants from late-exponential-phase cultures of strain 30-84 resulted in expression of a genomic phzB:lacZ reporter strain at a lower cell density than normal, indicating the possible presence of an autoinducer. These results indicate that PhzR is a member of a two-component sensor-regulator family with known or predicted carboxy-terminal DNA-binding domains which regulates gene expression in response to environmental and cell density signals.