Two-component systems allow bacteria to adapt to changing environmental conditions and may induce developmental changes necessary for survival. Chlamydia trachomatis alternates between two distinct developmental forms, each optimized for survival in a separate niche. Transcriptional regulation of development is not understood. The C. trachomatis genome sequence revealed a single pair of genes (ctcB-ctcC) predicted to encode proteins with sequence conservation to bacterial two-component systems. Sequence analysis revealed that the sensor kinase, CtcB, possessed an energy-sensing PAS domain and phosphorylation site. The response regulator, CtcC, had homology to sigma(54) activators, possessing conserved receiver and ATPase domains and phosphorylation site, but lacked the C-terminal DNA-binding domain. ctcB and ctcC were expressed late in the developmental cycle, and both proteins were detected in EB lysates. Recombinant CtcB and CtcC were purified from denatured Escherichia coli inclusion bodies and refolded. CtcC was found to aggregate as dimers and tetramers in solution. In vitro phosphorylation assays showed that CtcB autophosphorylated in the presence of Mg(2+), Mn(2+), and Fe(2+) and transferred the phosphoryl group in the presence of CtcC. Collectively, these results show that CtcB and CtcC function as a two-component system and are likely responsible for transcriptional regulation by sigma(54) holoenzyme during late-stage chlamydial development.