We identify two conserved domains in diverse bacterial and archaeal signaling proteins. One of them, the MEDS domain, is typified by the DmcR protein from Methylococcus and the other by the PocR protein of Salmonella typhi. We provide evidence that both these domains are likely to sense simple hydrocarbon derivatives and transduce downstream signals on binding these ligands. The PocR ligand-binding domain is shown to contain a novel variant of the fold found in PAS and GAF domains. The MEDS domain is present in both methylotrophs and complex methanogens, and both the MEDS and PocR domains show a lineage-specific expansion in the latter organisms, suggesting a role in sensing their principle growth substrates. The MEDS domain is also found in the negative regulators of the sigma factor SigB in actinomycetes, including pathogens like Mycobacterium tuberculosis. Hence it is possible that these sigma factors, involved in aerial mycelium development and stress response in the actinomycetes, might be under the regulation of as yet uncharacterized small molecules.