Cyclic di-GMP (c-di-GMP) is the specific nucleotide regulator of beta-1,4-glucan (cellulose) synthase in Acetobacter xylinum. The enzymes controlling turnover of c-di-GMP are diguanylate cyclase (DGC), which catalyzes its formation, and phosphodiesterase A (PDEA), which catalyzes its degradation. Following biochemical purification of DGC and PDEA, genes encoding isoforms of these enzymes have been isolated and found to be located on three distinct yet highly homologous operons for cyclic diguanylate, cdg1, cdg2, and cdg3. Within each cdg operon, a pdeA gene lies upstream of a dgc gene. cdg1 contains two additional flanking genes, cdg1a and cdg1d. cdg1a encodes a putative transcriptional activator, similar to AadR of Rhodopseudomonas palustris and FixK proteins of rhizobia. The deduced DGC and PDEA proteins have an identical motif structure of two lengthy domains in their C-terminal regions. These domains are also present in numerous bacterial proteins of undefined function. The N termini of the DGC and PDEA deduced proteins contain putative oxygen-sensing domains, based on similarity to domains on bacterial NifL and FixL proteins, respectively. Genetic disruption analyses demonstrated a physiological hierarchy among the cdg operons, such that cdg1 contributes 80% of cellular DGC and PDEA activities and cdg2 and cdg3 contribute 15 and 5%, respectively. Disruption of dgc genes markedly reduced in vivo cellulose production, demonstrating that c-di-GMP controls this process.