Penicillin resistance in Streptococcus pneumoniae has been attributed so far to the production of penicillin-binding protein (PBP) variants with decreased affinities for beta-lactam antibiotics. Cefotaxime-resistant laboratory mutants, selected after several steps on increasing concentrations of this beta-lactam, become deficient in transformation as well. A DNA fragment conferring both cefotaxime resistance and transformation deficiency was isolated and cloned from the mutant C306. The cefotaxime resistance associated with this resistance determinant was not accompanied with apparent changes in PBP properties, and it mapped on the chromosome distinct from the known resistance determinants, genes encoding PBP2x, PBP1a or PBP2b. Determination of a 2265 bp DNA sequence of the resistance determinant revealed two open reading frames, ciaR and ciaH, whose deduced amino acid sequence identified the corresponding proteins as the response regulator and histidine kinase receptor, respectively (members of the two families of bacterial signal-transducing proteins). Two hydrophobic peptide regions divided the histidine kinase CiaH into two putative domains: an N-terminal extracellular sensor part, and an intracellular C-terminal domain with the conserved His-226 residue, the presumed phosphorylation site. The single point mutations responsible for cefotaxime-resistance and transformation deficiency of C306 and of another two independently isolated cefotaxime-resistant mutants were each located in the C-terminal half of CiaH. A small extracellular protein, the competence factor, is required for induction of competence. Neither C306 nor the transformants obtained with the mutated ciaH gene produced competence factor, and exogenous competence factor could not complement the transformation deficiency, indicating that the signal-transducing system cia is involved in early steps of competence regulation.