The chlamydial developmental cycle is characterized by an intracellular replicative form, termed the reticulate body, and an extracellular form called the elementary body. Elementary bodies are characterized by a condensed chromatin, which is maintained by a histone H1-like protein, Hc1. Differentiation of elementary bodies to reticulate bodies is accompanied by dispersal of the chromatin as chlamydiae become transcriptionally active, although the mechanisms of Hc1 release from DNA have remained unknown. Dissociation of the nucleoid requires chlamydial transcription and translation with negligible loss of Hc1. A genetic screen was therefore designed to identify chlamydial genes rescuing Escherichia coli from the lethal effects of Hc1 overexpression. CT804, a gene homologous to ispE, which encodes an intermediate enzyme of the non-mevalonate methylerythritol phosphate (MEP) pathway of isoprenoid biosynthesis, was selected. E. coli coexpressing CT804 and Hc1 grew normally, although they expressed Hc1 to a level equivalent to that which condensed the chromatin of parent Hc1-expressing controls. Inhibition of the MEP pathway with fosmidomycin abolished IspE rescue of Hc1-expressing E. coli. Deproteinated extract from IspE-expressing bacteria caused dispersal of purified chlamydial nucleoids, suggesting that chlamydial histone-DNA interactions are disrupted by a small metabolite within the MEP pathway rather than by direct action of IspE. By partial reconstruction of the MEP pathway, we determined that 2-C-methylerythritol 2,4-cyclodiphosphate dissociated Hc1 from chlamydial chromatin. These results suggest that chlamydial histone-DNA interactions are disrupted upon germination by a small metabolite in the MEP pathway of isoprenoid biosynthesis.