The expression of the nitrogen-fixation genes of Rhizobium meliloti is controlled by oxygen. These genes are induced when the free oxygen concentration is reduced to microaerobic levels. Two regulator proteins, FixL and FixJ, initiate the oxygen-response cascade, and the genes that encode them have been cloned. The fixL product seems to be a transmembrane sensor that modulates the activity of the fixJ product, a cytoplasmic regulator. FixL and FixJ are homologous to a family of bacterial two-component regulators, for which the mode of signal transduction is phosphorylation. We report here the purification of both FixJ and a soluble truncated FixL (FixL*), overproduced from a single plasmid construct. FixL* catalyses its own phosphorylation and the transfer of the gamma-phosphate of ATP to Fix J. The resulting FixJ-phosphate linkage is sensitive to base, as are the aspartyl phosphates of homologous systems. Visible spectra of purified FixL* show that it is an oxygen-binding haemoprotein. We propose that FixL senses oxygen through its haem moiety and transduces this signal by controlling the phosphorylation of FixJ.