Myxococcus xanthus undergoes phase variation during growth to produce predominantly two colony phenotypes. The majority are yellow colonies containing swarm-proficient cells and a minority are tan colonies containing swarm-deficient cells. Comparison of the transcriptomes of a yellow variant, a tan variant, and three tan mutants led to the identification of differentially-regulated genes that define key segments of the phase variation pathway. For example, expression of genes for the yellow pigment DKxanthene and the antibiotic myxovirescin was increased significantly in yellow variants. In contrast, expression of the siderophore myxochelin, hemin binding proteins, and iron transport proteins was increased specifically in tan strains. Thus, a consequence of phase variation is that yellow cells shift from producing antibiotic and pigment to producing components involved in acquisition of iron, which may increase fitness during periods of iron limitation. Multiple protein kinases and HTH-Xre DNA-binding proteins identified in this study may be involved in the regulatory hierarchy that governs phase variation.