PhoB protein is the transcriptional activator for genes in the phosphate regulon of Escherichia coli, such as phoA and pstS, that are induced by phosphate deprivation. PhoR protein activates PhoB when phosphate is limiting and inactivates it when phosphate is in excess. We constructed a plasmid with a mutant phoR gene (phoR1084), which encoded a PhoR protein (PhoR1084) lacking the amino-terminal hydrophobic region of the intact protein. The cells carrying the plasmid overproduced PhoR1084, which was recovered in the soluble fraction of the cell lysate. We purified the Phor1084 protein and showed that it was autophosphorylated in the presence of ATP, and the phosphate group on the protein was rapidly transferred to PhoB. The phosphorylation of PhoB protein occurred concurrently with the acquisition of the ability to activate transcription from the pstS promoter. On the basis of these findings, we propose that phosphorylated PhoB protein activates transcription from the promoters of the phosphate regulon, and that the role of PhoR is to catalyze the formation and breakdown of phosphorylated PhoB in response to phosphate concentrations in the medium.