The function of the regulatory protein AveR in Streptomyces avermitilis was examined. An aveR deletion mutant abolished avermectin production and produced more oligomycin, and its phenotype was complemented by a single copy of the aveR gene. Removal of the C-terminal HTH domain of AveR abolished avermectin biosynthesis, indicating the importance of HTH domain for AveR function. Promoter titration and promoter probe assays suggested that the transcription of aveA1, encoding polypeptide AVES1 of avermectin PKS, was activated by AveR. Chromatin immunoprecipitation (ChIP) assay showed that the predicted promoter regions of both the ave cluster and the olm cluster were target sites of AveR, and the DNA-binding activity of AveR was dependent on its HTH domain. RT-PCR analysis revealed that the transcriptions of ave structural genes were dependent on AveR, but that of olm structural genes and putative pathway-specific regulatory genes increased in the aveR mutants. Consistent with these observations, overexpression of aveR successfully increased avermectin production. These results indicated that aveR encodes a pathway-specific activator essential for avermectin biosynthesis and it also negatively affects oligomycin biosynthesis.