The Pseudomonas fluorescens 23F phosphonoacetate hydrolase gene (phnA) encodes a novel carbon-phosphorus bond cleavage enzyme whose expression is independent of the phosphate status of the cell. Analysis of the regions adjacent to the phosphonoacetate hydrolase structural gene (phnA) indicated the presence of five open reading frames (ORFs). These include one (phnR) whose putative product shows high levels of homology to the LysR family of positive transcriptional regulators. Its presence was shown to be necessary for induction of the hydrolase activity. 2-Phosphonopropionate was found to be an inducer (and poor substrate) for phosphonoacetate hydrolase. Unlike phosphonoacetate, which is also an inducer of phosphonoacetate hydrolase, entry of 2-phosphonopropionate into cells appeared to be dependent on the presence of a gene (phnB) that lies immediately downstream of phnA and whose putative product shows homology to the glycerol-3-phosphate transporter. RNA analysis revealed transcripts for the phnAB and phnR operons, which are transcribed divergently; the resulting mRNAs overlapped by 29 nucleotide bases at their 5' ends. Transcripts of phnAB were detected only in cells grown in the presence of phosphonoacetate, whereas transcripts of phnR were observed in cells grown under both induced and uninduced conditions. The expression of three additional genes found in the phnA region did not appear necessary for the degradation of phosphonoacetate and 2-phosphonopropionate by either Pseudomonas putida or Escherichia coli cells.