We have investigated the mechanism of regulation of the bgl operon in Escherichia coli K-12. A regulatory region has been located downstream of the bgl promoter, revealing a 130 base leader containing a sequence from +64 to +112 characteristic of a rho-independent terminator. In vitro, over 90% of the transcripts initiated at the bgl promoter terminate within the leader, at the 3' end of the terminator. Transcriptional fusions containing the terminator require the bglC gene in trans for expression; fusions deleted for the sequence show bglC-independent expression. A mutation resulting in partially constitutive expression of the fusion maps within the terminator. We propose that the bglC gene product mediates positive regulation of the bgl operon by functioning as an antiterminator at the rho-independent terminator located within the leader.