Bacillus cereus secretes phospholipases C, which hydrolyze phosphatidylcholine, sphingomyelin and phosphatidylinositol. A 7.5-kb HindIII fragment of B. cereus DNA cloned into Escherichia coli, with pUC18 as a vector, directed the synthesis of the sphingomyelin-hydrolyzing phospholipase C, sphingomyelinase. Nucleotide sequence analysis of the subfragment revealed that it contained two open reading frames in tandem. The upstream truncated open reading frame corresponds to the carboxy-terminal portion of the phosphatidylcholine-hydrolyzing phospholipase C, and the downstream open reading frame to the entire translational portion of the sphingomyelinase. The two phospholipase C genes form a gene cluster. As inferred from the DNA sequence, the B. cereus sphingomyelinase has a signal peptide of 27 amino acid residues and the mature enzyme comprises 306 amino acid residues, with a molecular mass of 34233 Da. The signal peptide of the enzyme was found to be functional in protein transport across the membrane of E. coli. The enzymatic properties of the sphingomyelinase synthesized in E. coli resemble those of the donor strain sphingomyelinase. The enzymatic activity toward sphingomyelin was enhanced 20-30-fold in the presence of MgCl2, and the adsorption of the enzyme onto erythrocyte membranes was accelerated in the presence of CaCl2.