The cox gene is the first gene of the early operon of bacteriophage P2. The early promoter Pe and the repressor promoter Pc are located close to each other and in such a way that their transcripts have opposite polarity and show an overlap of about 30 nucleotides. The expression of the early operon and of the C gene was studied in vivo by using fusions to a promoterless cat (chloramphenicol acetyl transferase) gene. The results show that the Cox protein negatively autoregulates the early operon and inhibits the formation of the repressor C. By measuring the efficiency of plating of a series of P2 virulent deletion mutants on bacteria carrying a cloned cox gene, the site of action of the Cox protein was mapped within the Pe-Pc region. The stimulatory effect of the C protein on expression of the Pc promoter was found to be due to inhibition of transcription from Pc; this was demonstrated by mutating Pe which showed that loss of transcription from Pe stimulated transcription from Pc. Hence, this is a case of regulation of gene expression by convergent transcription. By cloning the region C-Pe-Pc-cox such that the cat and kan genes are expressed from Pc and Pe, respectively, it was shown that only one of the resistances (Cm and Km) was expressed. This mimics the choice between lysogeny and lytic growth of the phage. The 'lysogenic' state was very stable whereas the 'lytic' state flipped to the 'lysogenic' at a somewhat higher frequency. The presence of a cloned cox gene drastically stimulated the formation of free phage from a P2-lysogen and dramatically reduced the frequency of lysogenization after P2 infection. We conclude that the pleiotropic effects of the cox (control of excision) gene, namely effects on lysogenization, formation of free phage and site-specific P2 recombination, can be explained by the effect of the Cox protein on the activity of the promoters Pc and Pe.