The cel (cellobiose utilization) operon of Escherichia coli K12 is not expressed in the wild-type organism. However, mutants that can express the operon and thereby utilize the beta-glucoside sugars cellobiose, arbutin and salicin are easily isolated. Two kinds of mutations are capable of activating the operon. The first involves mutations that allow the repressor to recognize the substrates cellobiose, arbutin and salicin as inducers. We have identified the sequence changes in five different active alleles and found those differences to be single base pair changes at one of two lysine codons in the repressor gene. The second kind of mutation involves the integration of the insertion sequences IS1, IS2 or IS5 into a 108-bp region 72-180 bp upstream of the start of transcription. Integration occurs at several different sites and in different orientations. Transcription of the cel operon begins at the same base pair in all mutants examined. Of 44 independent cel+ mutants, 27 were activated by point mutations and 17 were activated by insertion sequences. The preferred mechanism of activation appears to be strain dependent, since one of the parents yielded 94% insertionally activated alleles, while another yielded 100% point mutation activated alleles.