We previously proposed that the adjacent dnrIJ genes represent a two-component regulatory system controlling daunorubicin biosynthesis in Streptomyces peucetius on the basis of the homology of the DnrI and DnrJ proteins to other response regulator proteins and the effect of a dnrI::aphII mutation. In the present paper we report the results of work with the dnrI::aphII mutant in complementation, bioconversion, and transcriptional analysis experiments to understand the function of dnrI. For five putative operons in the sequenced portion of the S. peucetius daunorubicin biosynthesis gene cluster examined, all of the potential transcripts are present in the delta dnrJ mutant and wild-type strains but absent in the dnrI::aphII strain. Since these transcripts code for both early- and late-acting enzymes in daunorubicin biosynthesis, dnrI seems to control all of the daunorubicin biosynthesis genes directly or indirectly. Transcriptional mapping of the 5' and 3' ends of the dnrIJ transcript and the termination site of the convergently transcribed dnrZUV transcript reveals, interestingly, that the two transcripts share extensive complementarity in the regions coding for daunorubicin biosynthesis enzymes. In addition, dnrI may regulate the expression of the drrAB and drrC daunorubicin resistance genes. The delta dnrJ mutant accumulates epsilon-rhodomycinone, the aglycone precursor of daunorubicin. Since this mutant contains transcripts coding for several early- and late-acting enzymes and since dnr mutants blocked in deoxysugar biosynthesis accumulate epsilon-rhodomycinone, we conclude that dnrJ is a daunosamine biosynthesis gene. Moreover, newly available gene sequence data show that the DnrJ protein resembles a group of putative aminotransferase enzymes, suggesting that the role of DnrJ is to add an amino group to an intermediate of daunosamine biosynthesis.