The uracil-DNA glycosylase inhibitor gene (ugi) of the Bacillus subtilis bacteriophage PBS2 has been subcloned to a 720-base pair DNA fragment contained in pZW2-0.7 and its nucleotide sequence determined. Using nucleotide deletion analysis, we have located the cloned ugi gene along with potential regulatory elements. A promoter-like region (-10 and -35 consensus sequences) similar to other B. subtilis genes and the Shine-Dalgarno sequence characteristic of Gram-positive bacteria were both identified upstream from the initiator AUG codon. A 17-nucleotide exact inverted repeat followed by runs of adenine and thymine residues was positioned almost immediately downstream of the ochre codon. The ugi gene product was identified on sodium dodecyl sulfate-polyacrylamide gels using Escherichia coli minicells containing pZW2-0.7 and by recovering uracil-DNA glycosylase inhibitor activity following electrophoresis. The ugi gene codes for an acidic polypeptide of 9,477 molecular weight (84 amino acids) whose electrophoretic mobility was greater than predicted for a protein of this size. The mode of inhibition did not appear to involve a catalytic process nor did it directly involve inhibitor-DNA interaction. Rather, the inhibitor protein was shown to bind physically to the E. coli uracil-DNA glycosylase, forming a 36,000 molecular weight complex. This complex seems to be reversible, since inhibitor activity was recovered after heat treatment of the complex. In addition, we demonstrated that the inhibitor protein is active against uracil-DNA glycosylases isolated from several diverse biological sources but inactive against E. coli deoxyuridine triphosphatase, DNA polymerase I, and DNA polymerase alpha, beta, and gamma.