Lipid A from several strains of the N2-fixing bacterium Rhizobium leguminosarum displays significant structural differences from Escherichia coli lipid A, one of which is the complete absence of phosphate groups. However, the first seven enzymes of E. coli lipid A biosynthesis, leading from UDP-GlcNAc to the phosphorylated intermediate, 2-keto-3-deoxyoctulosonate (Kdo2)-lipid IVA, are present in R. leguminosarum. We now describe a membrane-bound phosphatase in R. leguminosarum extracts that removes the 4' phosphate of Kdo2-lipid IVA. The 4' phosphatase is selective for substrates containing the Kdo domain. It is present in extracts of R. leguminosarum biovars phaseoli, viciae, and trifolii but is not detectable in E. coli and Rhizobium meliloti. A nodulation-defective strain (24AR) of R. leguminosarum biovar trifolii, known to contain a 4' phosphatase residue on its lipid A, also lacks measurable 4' phosphatase activity. The Kdo-dependent 4' phosphatase appears to be a key reaction in a pathway for generating phosphate-deficient lipid A.