For Staphylococcus aureus, it is hypothesized that two genes located upstream of the beta-lactamase gene, blaZ, are required for the inducible expression of beta-lactamase. blaR1 is predicted to encode a signal-transducing membrane protein, and blaI is predicted to encode a repressor protein. These same two genes may also regulate the production of penicillin-binding protein 2a (PBP 2a), a protein essential for expression of methicillin resistance. To confirm that these two genes encode products that can control both beta-lactamase and PBP 2a production, blaI, blaR1, and blaZ with a 150-nucleotide deletion at the 3' end were subcloned from a 30-kb staphylococcal beta-lactamase plasmid and three beta-lactamase-negative strains of methicillin-resistant S. aureus were transformed with the recombinant plasmid containing that insert. The production of PBP 2a and a nonfunctional beta-lactamase was detected by fluorography and by immunoblots with polyclonal antisera directed against each of the proteins. Whereas the parent strains did not produce beta-lactamase and constitutively produced PBP 2a, PBP 2a and a truncated beta-lactamase were now inducible in the transformants. Therefore, two plasmid-derived genes regulate the production of both PBP 2a and beta-lactamase.