High levels of the intracellular signalling molecule cyclic diguanylate (c-di-GMP) supress motility and activate exopolysaccharide (EPS) production in a variety of bacterial species. In many bacteria part of the effect of c-di-GMP is on gene expression, but the mechanism involved is not known for any species. We have identified the protein FleQ as a c-di-GMP-responsive transcriptional regulator in Pseudomonas aeruginosa. FleQ is known to activate expression of flagella biosynthesis genes. Here we show that it also represses transcription of genes including the pel operon involved in EPS biosynthesis, and that this repression is relieved by c-di-GMP. Our in vivo data indicate that FleQ represses pel transcription and that pel transcription is not repressed when intracellular c-di-GMP levels are high. FleN, a known antiactivator of FleQ also participates in control of pel expression. In in vitro experiments we found that FleQ binds to pel promoter DNA and that this binding is inhibited by c-di-GMP. FleQ binds radiolabelled c-di-GMP in vitro. FleQ does not have amino acid motifs that resemble previously defined c-di-GMP binding domains. Our results show that FleQ is a new type of c-di-GMP binding protein that controls the transcriptional regulation of EPS biosynthesis genes in P. aeruginosa.