Studies of the ferric citrate transport genes in Escherichia coli K-12 have revealed a novel type of transcriptional regulation. The inducer, ferric citrate, binds to an outer membrane protein and must not be transported into the cells to initiate transcription of the ferric citrate transport genes. Rather, a signaling cascade from the cell surface across the outer membrane, the periplasm, and the cytoplasmic membrane into the cytoplasm transmits information on the presence of the inducer in the culture medium into the cytoplasm, where gene transcription occurs. The outer membrane protein FecA serves as a signal receiver and as a signal transmitter across the outer membrane. The FecR protein serves as a signal receiver in the periplasm and as a signal transmitter across the cytoplasmic membrane into the cytoplasm, where the FecI sigma factor is activated to bind RNA polymerase and specifically initiate transcription of the fecABCDE transport genes by binding to the promoter upstream of the fecA gene. Transcription of the fecI fecR regulatory genes is repressed by Fe(2+) bound to the Fur repressor protein. Under iron-limiting conditions, Fur is not loaded with Fe(2+), the fecI and fecR genes are transcribed, and the FecI and FecR proteins are synthesized and respond to the presence of ferric citrate in the medium when ferric citrate binds to the FecA protein. Regulation of the fec genes represents the paradigm of a growing number of gene regulation systems involving transmembrane signaling across three cellular compartments.