Sinorhizobium meliloti is a nitrogen-fixing bacterial symbiont of alfalfa and related legumes. Symbiotic infection by S. meliloti requires an osmosensory two-component system composed of the response regulator FeuP and the sensor kinase FeuQ. The FeuPQ pathway positively regulates transcription of multiple genes including ndvA, which encodes the cyclic glucan exporter. Here we show that proper regulation of this signalling pathway is essential for cell viability. Without the small 83 amino acid protein FeuN, S. meliloti cells are unable to grow, and this phenotype is dependent on the FeuPQ pathway. Using Escherichia coli as a heterologous system, we show that expression of feuP and feuQ leads to a dramatic increase in ndvA promoter activity, but that simultaneous expression of feuN abrogates this effect. Random mutagenesis of the feuPQ bicistron revealed a defined region of the FeuQ protein in and around its two predicted transmembrane domains that are required for FeuN-dependent signalling modulation. Marker enzyme fusion experiments indicate that most of the FeuN polypeptide is localized to the periplasm. Our data support a model in which FeuN interacts directly with FeuQ to attenuate phosphorylation of FeuP, and that without this activity, hyperactive signalling through FeuPQ results in cessation of growth or death.