The esg locus is required for the formation of multicellular fruiting bodies and spores by the developmental bacterium Myxococcus xanthus. Studies have suggested that esg mutants are defective in the production of an essential signal (E-signal) used in cell-cell communication and that E-signalling is required for the expression of many developmental genes. Recently we have determined that the esg locus encodes components of a branched-chain keto acid dehydrogenase, a multienzyme complex involved in branched-chain amino acid metabolism in many bacteria and higher organisms. During vegetative growth in M. xanthus, this enzyme complex appears to participate in the production of the branched-chain fatty acids found in this organism. M. xanthus fatty acids (including the branched-chain fatty acids) have been observed to have a variety of effects on developing cells. These effects include: (i) the lysis of M. xanthus cells (autocide activity), (ii) acceleration of the rate of sporulation and (iii) rescue of sporulation by certain development-defective mutants. These and other results suggest a model in which the branched-chain fatty acids, synthesized during growth, are released from cellular phospholipid by a developmentally regulated phospholipase during fruiting-body formation. This model proposes that one or more of the branched-chain fatty acids that are released constitutes the E-signal which must be transmitted between cells to complete M. xanthus development.