In Staphylococcus carnosus, the nreABC (for nitrogen regulation) genes were identified and shown to link the nitrate reductase operon (narGHJI) and the putative nitrate transporter gene narT. An nreABC deletion mutant, m1, was dramatically affected in nitrate and nitrite reduction and growth. Transcription of narT, narGHJI, and the nitrite reductase (nir) operon was severely reduced even when cells were cultivated anaerobically without nitrate or nitrite. nreABC transcripts were detected when cells were grown aerobically or anaerobically with or without nitrate or nitrite. NreA is a GAF domain-containing protein of unknown function. In vivo and in vitro studies showed that NreC is phosphorylated by NreB and that phospho-NreC specifically binds to a GC-rich palindromic sequence to enhance transcription initiation. This binding motif was found at the narGHJI, nir, and narT promoters but not at the moeB promoter. NreB is a cytosolic protein with four N-terminal cysteine residues. The second cysteine residue was shown to be important for NreB function. In vitro autophosphorylation of NreB was not affected by nitrate, nitrite, or molybdate. The nir promoter activity was iron dependent. The data provide evidence for a global regulatory system important for aerobic and anaerobic metabolism, with NreB and NreC forming a classical two-component system and NreB acting as a sensor protein with oxygen as the effector molecule.