Synthesis of the capsular polysaccharide colanic acid in Escherichia coli K12 is regulated by a complex network of regulatory proteins. This regulation is expressed at the level of transcription of the cps (capsular polysaccharide synthesis) genes. Two positive regulators, RcsA and RcsB, are necessary for maximal capsule expression. The availability of RcsA is normally limited because the RcsA protein is rapidly degraded by the Lon ATP-dependent protease. Therefore Lon acts, indirectly, as a negative regulator of capsule synthesis. The sequence predicted for RcsB suggests that it is the effector component of a two-component system; a protein with homology to sensors, RcsC, also plays a role in capsule regulation. We propose a model for capsule synthesis in which RcsA interacts with RcsB to stimulate transcription of the cps genes. The mechanism of regulation of colanic acid synthesis in E. coli may apply to other capsules in a variety of Gram-negative bacteria.