Most strains of Shigella flexneri 2a and enteroaggregative Escherichia coli carry a highly conserved chromosomal locus which encodes a 109-kDa secreted mucinase (called Pic) and, on the opposite strand in overlapping fashion, an oligomeric enterotoxin called ShET1, encoded by the setA and setB genes. Here, we characterize the genetic regulation of these overlapping genes. Our data suggest that pic and the setBA loci are transcribed as complementary 4-kb mRNA species. The major pic promoter is maximally activated at 37°C in exponential growth phase. Our data suggest that the setB gene is transcribed from a promoter which lies more than 1.5 kb upstream of the setB structural gene; setA may be transcribed via readthrough of the setB transcript and possibly by its own promoter. The long leader of the setB gene provides a strong silencing effect on setB transcription. The signals which provide relief from setB silencing are not clear, but significant induction is observed in a continuous anaerobic culture of human fecal bacteria, suggesting that some complex characteristics of the human intestine act to lift repression of setB expression. Our studies provide the first insights into the mechanisms affecting expression of this unusual virulence locus.