Bacteria that use phosphonates as a phosphorus source must be able to break the stable carbon-phosphorus bond. In Escherichia coli phosphonates are broken down by a C-P lyase that has a broad substrate specificity. Evidence for a lyase is based on in vivo studies of product formation because it has been proven difficult to detect the activity in vitro. By using molecular genetic techniques, we have studied the genes for phosphonate uptake and degradation in E. coli, which are organized in an operon of 14 genes, named phnC to phnP. As expected for genes involved in P acquisition, the phnC-phnP operon is a member of the PHO regulon and is induced many hundred-fold during phosphate limitation. Three gene products (PhnC, PhnD and PhnE) comprise a binding protein-dependent phosphonate transporter, which also transports phosphate, phosphite, and certain phosphate esters such as phosphoserine; two gene products (PhnF and PhnO) may have a role in gene regulation; and nine gene products (PhnG, PhnH, PhnI, PhnJ, PhnK, PhnL, PhnM, PhnN, and PhnP) probably comprise a membrane-associated C-P lyase enzyme complex. Although E. coli can degrade many different phosphonates, the ability to use certain phosphonates appears to be limited by the specificity of the PhnCDE transporter and not by the specificity of the C-P lyase.