Production of Bacillus cereus and Bacillus anthracis toxins is controlled by a number of transcriptional regulators. Here we report the crystal structure of B. cereus HlyIIR, a regulator of the gene encoding the pore-forming toxin hemolysin II. We show that HlyIIR forms a tight dimer with a fold and overall architecture similar to the TetR family of repressors. A remarkable feature of the structure is a large internal cavity with a volume of 550 A(3) suggesting that the activity of HlyIIR is modulated by binding of a ligand, which triggers the toxin production. Virtual ligand library screening shows that this pocket can accommodate compounds with molecular masses of up to 400-500 Da. Based on structural data and previous biochemical evidence, we propose a model for HlyIIR interaction with the DNA.