The hemolytic activity of Serratia marcescens was examined as a function of iron availability. Restriction of iron by the nonmetabolizable chelator 2,2'-dipyridyl or the iron-binding protein transferrin produced a marked increase in hemolytic activity. The hemolytic activity of S. marcescens is determined by two adjacent genes, 5'-shlB-shlA-3', where shlA encodes the hemolysin which requires the ShlB protein for activity. A gene fusion between the promoter-proximal portion of shlA and phoA, the Escherichia coli alkaline phosphatase gene, was subcloned into a medium-copy-number vector, and the recombinant plasmid was introduced into S. marcescens. The expression of shlA was measured as a function of alkaline phosphatase activity, which increased threefold under iron-restricted conditions. Removal of the 5' noncoding region upstream of shlB in the fusion vector resulted in a 10-fold decrease in alkaline phosphatase activity under iron-sufficient conditions, with no effect of iron limitation on this residual activity. This suggested that the site mediating iron regulation of shlA expression occurs upstream of shlB. Consistent with this, we observed iron-regulated synthesis of the ShlB protein in Western immunoblots of isolated outer membranes. The hemolysin determinant was subsequently expressed on a medium-copy-number vector in fur+/fur isogenic strains of E. coli K-12, where a 10-fold-higher activity was observed in the mutant strain compared with the wild type. A sequence exhibiting some homology to the Fur-binding consensus sequence was identified upstream of the shlB coding region, overlapping the -35 region of a putative promoter.