Erwinia rhapontici is able to convert sucrose into isomaltulose (palatinose, 6-O-alpha-D-glucopyranosyl-D-fructose) and trehalulose (1-O-alpha-D-glucopyranosyl-D-fructose) by the activity of a sucrose isomerase. These sucrose isomers cannot be metabolized by plant cells and most other organisms and therefore are possibly advantageous for the pathogen. This view is supported by the observation that in vitro yeast invertase activity can be inhibited by palatinose, thus preventing sucrose consumption. Due to the lack of genetic information, the role of sucrose isomers in pathogenicity has not been evaluated. Here we describe for the first time the cloning and characterization of the palatinose (pal) genes from Erwinia rhapontici. To this end, a 15-kb chromosomal DNA fragment containing nine complete open reading frames (ORFs) was cloned. The pal gene products of Erwinia rhapontici were shown to be homologous to proteins involved in uptake and metabolism of various sugars from other microorganisms. The palE, palF, palG, palH, palK, palQ, and palZ genes were oriented divergently with respect to the palR and palI genes, and sequence analysis suggested that the first set of genes constitutes an operon. Northern blot analysis of RNA extracted from bacteria grown under various conditions implies that the expression of the palI gene and the palEFGHKQZ genes is oppositely regulated at the transcriptional level. Genes involved in palatinose uptake and metabolism are down regulated by sucrose and activated by palatinose. Palatinose activation is inhibited by sucrose. Functional expression of palI and palQ in Escherichia coli revealed sucrose isomerase and palatinase activity, respectively.