HC-toxin is an epoxide-containing cyclic tetrapeptide that is a critical virulence determinant in the pathogenic interaction between the filamentous fungus Cochliobolus carbonum and maize. HC-toxin exerts a potent cytostatic effect on plant and animal cells by inhibiting histone deacetylase. The biosynthesis of HC-toxin by C. carbonum is controlled by a complex genetic locus, TOX2, that contains multiple, duplicated copies of genes encoding export and biosynthetic enzymes. A new gene in the TOX2 complex, TOXE, has now been isolated. Mutation of TOXE by targeted gene disruption has no effect on growth and sporulation but abolishes HC-toxin production and pathogenicity. TOXE is required for the expression of three genes with a known or putative role in HC-toxin production, but is not required for expression of HTS1, which encodes the large, multifunctional peptide synthetase that is the central enzyme in HC-toxin biosynthesis. At its N-terminus, TOXEp has a bZIP basic DNA binding domain, but it does not contain any discernible leucine zipper or helix-loop-helix. At its carboxy terminus, TOXEp contains four ankyrin repeats. In having these two common regulatory motifs in a single polypeptide, TOXEp appears to represent a novel class of regulatory protein. TOXE is present only in HC-toxin-producing (Tox2+) isolates of C. carbonum. Most Tox2+ isolates have two copies: in strain SB111, one copy of TOXE is on the same 3.5-Mb chromosome that contains all of the other genes known to be involved in HC-toxin biosynthesis, and the second copy of TOXE is on a 0.7-Mb chromosome.