The genes involved in the biosynthetic pathway of ectoine (2-methyl-1,4,5,6-tetrahydropyrimidine-4-carboxylic acid) from Bacillus halodurans were cloned as an operon and expressed in E. coli. Analysis of the deduced ectoine biosynthesis cluster amino acid sequence revealed that the ectoine operon contain 2,389 bp, encoded by three genes; ectA, ectB and ectC that encode proteins of 189, 427 and 129 amino acids with deduced molecular masses of 21,048, 47,120 and 14,797 Da respectively. Extracts of induced cells showed two bands at 41 kDa and 17 kDa, possibly corresponding to the products of the later two genes. However the expression of ectA gene could not be ascertained by SDS-PAGE. The activity of the ectA protein was confirmed by an acylation assay. The transgenic E. coli accumulated upto 4.6 mg ectoine/l culture. This is the first report of an engineered E. coli strain carrying the ectoine genes of the alkaliphilic bacterium, B. halodurans.