In Streptococcus pneumoniae, the first four genes of the capsule locus (cpsA to cpsD) are common to most serotypes. By analysis of various in-frame deletion and site-directed mutants, the function of their gene products in capsular polysaccharide (CPS) biosynthesis was investigated. We found that while CpsB, C and D are essential for encapsulation, CpsA is not. CpsC and CpsD have similarity to the amino-terminal and carboxy-terminal regions, respectively, of the autophosphorylating protein-tyrosine kinase Wzc from Escherichia coli. Alignment of CpsD with Wzc and other related proteins identified conserved Walker A and B sequence motifs and a tyrosine rich domain close to the carboxy-terminus. We have shown that CpsD is also an autophosphorylating protein-tyrosine kinase and that point mutations in cpsD affecting either the ATP-binding domain (Walker A motif) or the carboxy-terminal [YGX]4 repeat domain eliminated tyrosine phosphorylation of CpsD. We describe, for the first time, the phenotypic impact of these two mutations on polysaccharide production and show that they affect CPS production differently. Whereas a mutation in the Walker A motif resulted in loss of encapsulation, mutation of the tyrosines in the [YGX]4 repeat domain resulted in an apparent increase in encapsulation and a mucoid phenotype. These data suggest that autophosphorylation of CpsD at tyrosine attenuates its activity and reduces the level of encapsulation. Additionally, we demonstrated that CpsC is required for CpsD tyrosine phosphorylation and that CpsB influences dephosphorylation of CpsD. These results are consistent with CpsD tyrosine phosphorylation acting to negatively regulate CPS production. This has implications for the function of CpsC/CpsD homologues in both Gram-positive and Gram-negative bacteria and provides a mechanism to explain regulation of CPS production during pathogenesis.