Shiga toxins (Stxs), encoded by the stxA and stxB genes, are important contributors to the virulence of Escherichia coli O157:H7 and other Stx-producing E. coli (STEC) strains. The stxA and stxB genes in STEC strains are located on the genomes of resident prophages of the lambda family immediately downstream of the phage late promoters (p(R')). The phage-encoded Q proteins modify RNA polymerase initiating transcription at the cognate p(R') promoter which creates transcription complexes that transcend a transcription terminator immediately downstream of p(R') as well as terminator kilobases distal to p(R'). To test if this Q-directed processive transcription plays a role in stx(2)AB expression, we constructed a mutant prophage in an O157:H7 clinical isolate from which p(R') and part of Q were deleted but which has an intact pStx, the previously described stx(2)AB-associated promoter. We report that production of significant levels of Stx2 in this O157:H7 isolate depends on the p(R') promoter. Since transcription initiating at p(R') ultimately requires activation of the phage lytic cascade, expression of stx(2)AB in STEC depends primarily on prophage induction. By showing this central role for the prophage in stx(2)AB expression, our findings contradict the prevailing assumption that phages serve merely as agents for virulence gene transfer.