Streptomyces coelicolor produces at least three catalases, the expression of which varies under different conditions. We characterized a gene (catB) for developmentally controlled catalase of 779 amino acids (83408 Da), homologous to KatE of Escherichia coli and Bacillus subtilis. Expression of the catB gene increased at the stationary phase in liquid culture and after the onset of differentiation on solid culture. It was also increased by osmotic treatments. Transcription was initiated from a promoter (catBp), whose sequence (ATGCCTCG-N13-GGGTAC) resembled promoters recognized by sigmaB of B. subtilis. CatB protein underwent proteolytic cleavage of its N-terminal 95 amino acids and was secreted to the medium when cells sporulated. Disruption of the catB gene caused impairment in the formation of aerial mycelium and reduction in the synthesis of undecylprodigiosin. On the contrary, hyperproduction of actinorhodin was observed in accordance with the increase in actII-ORF4 transcription. In addition, catB mutant became hypersensitive to osmotic stresses. These results suggest that regulated synthesis of CatB protein is necessary to ensure proper differentiation as well as to protect S. coelicolor cells against osmotic stresses.