Transcription of the bphA1A2A3A4C1B genes, which are responsible for the conversion of biphenyl and polychlorinated biphenyl to the meta-cleavage products in Rhodococcus sp. strain RHA1, was examined. The bphA1 promoter (P(bphA1)) was identified and was shown to promote transcription induction by biphenyl and ethylbenzene. An 8.8-kb HindIII fragment that promotes transcription induction of P(bphA1) in Rhodococcus erythropolis IAM1399 was isolated from the region downstream of bphB by using a reporter plasmid containing P(bphA1). Analysis of the nucleotide sequence of this fragment revealed a set of putative two-component regulatory system genes, which were designated bphS and bphT. Deletion analysis of the 8.8-kb HindIII fragment indicated that bphT is responsible for the basal activation of P(bphA1) and that both bphS and bphT are required for the elevated basal activation of and transcriptional induction by biphenyl of P(bphA1). These results support the notion that bphS and bphT encode a sensor kinase and a response regulator, respectively, of a two-component regulatory system. The bphS and bphT genes promote transcriptional induction by a variety of aromatic compounds, including biphenyl, benzene, alkylbenzenes, and chlorinated benzenes. A promoter activity assay and reverse transcription (RT)-PCR analysis revealed a weak constitutive promoter in the adjacent region upstream of bphS. RT-PCR analysis indicated that there is induced transcription of bphA1 through bphT, in which P(bphA1) is thought to take part. An insertionally inactivated bphS mutant, SDR1, did not grow on biphenyl. Growth was restored by introduction of an intact bphS gene into SDR1. These results indicate that at least bphS is indispensably responsible for the growth of RHA1 on biphenyl.