The chromatin of chlamydial elementary bodies (EBs) is stabilized by proteins with sequence homology to eukaryotic H1. These histone homologues, termed Hc1 and Hc2, are expressed only during the late stages of the chlamydial life cycle concomitant with the reorganization of reticulate bodies (RBs) into metabolically inactive EBs. Hc1 and Hc2 play a major role in establishment of nucleoid structure as well as in downregulation of gene expression as RBs differentiate back to EBs. The effects of Hc1 on gene expression patterns requires that chlamydiae strictly control Hc1 activity. Hc1 expression and activity are thus regulated transcriptionally as well as post-transcriptionally. We describe here a small regulatory RNA (sRNA) that acts as an additional checkpoint to negatively regulate Hc1 synthesis. Coexpression of the sRNA with hctA, the gene that encodes Hc1, in Escherichia coli inhibited Hc1 translation but did not affect hctA mRNA transcription or stability. IhtA (inhibitor of hctA translation) was present only in purified RBs while Hc1 was present only in purified EBs. During infection IhtA, but not Hc1, was present in RBs and was downregulated while Hc1 was upregulated upon RB to EB differentiation. Thus, we propose that IhtA is part of a global regulatory circuit that controls differentiation of RBs to EBs during the chlamydial life cycle.