A molecular approach was used to investigate a recently described candidate division of the domain Bacteria, TM7, currently known only from environmental 16S ribosomal DNA sequence data. A number of TM7-specific primers and probes were designed and evaluated. Fluorescence in situ hybridization (FISH) of a laboratory scale bioreactor using two independent TM7-specific probes revealed a conspicuous sheathed-filament morphotype, fortuitously enriched in the reactor. Morphologically, the filament matched the description of the Eikelboom morphotype 0041-0675 widely associated with bulking problems in activated-sludge wastewater treatment systems. Transmission electron microscopy of the bioreactor sludge demonstrated that the sheathed-filament morphotype had a typical gram-positive cell envelope ultrastructure. Therefore, TM7 is only the third bacterial lineage recognized to have gram-positive representatives. TM7-specific FISH analysis of two full-scale wastewater treatment plant sludges, including the one used to seed the laboratory scale reactor, indicated the presence of a number of morphotypes, including sheathed filaments. TM7-specific PCR clone libraries prepared from the two full-scale sludges yielded 23 novel TM7 sequences. Three subdivisions could be defined based on these data and publicly available sequences. Environmental sequence data and TM7-specific FISH analysis indicate that members of the TM7 division are present in a variety of terrestrial, aquatic, and clinical habitats. A highly atypical base substitution (Escherichia coli position 912; C to U) for bacterial 16S rRNAs was present in almost all TM7 sequences, suggesting that TM7 bacteria, like Archaea, may be streptomycin resistant at the ribosome level.