The high energetic requirements for nitrogen fixation and the extreme oxygen sensitivity of the nitrogenase enzyme impose physiological constraints on diazotrophy that necessitate stringent control of nitrogen fixation (nif) gene expression at the transcriptional level. In the gamma-subdivision of the Proteobacteria, this control is maintained by a regulatory complex comprising an enhancer-binding protein (NIFA), which activates transcription at sigmaN-dependent nif (nitrogen fixation) promoters, and a sensor protein (NIFL), which inhibits NIFA activity in response to fixed nitrogen and external concentrations of molecular oxygen. Inhibition of NIFA activity by NIFL apparently requires stoichiometric amounts of the two proteins, implying direct protein-protein interaction rather than catalytic modulation of NIFA activity. NIFL contains FAD as a prosthetic group and is a novel type of flavoprotein in which the oxidation state of the bound flavin acts as a molecular switch to control transcriptional activation by NIFA. The FAD-binding domain of NIFL contains a motif common to a large family of redox sensory proteins. In addition to its ability to act as a redox sensor, the activity of NIFL is also responsive to adenosine nucleotides, particularly ADP, suggesting that formation of the inhibitory complex might be regulated by the ATP/ ADP ratio. Proposed mechanisms for the inhibition of NIFA activity by NIFL are beginning to emerge.