Whereas bacteria such as Escherichia coli have been known for some time to cleave carbon-phosphorus (C-P) bonds in unactivated alkylphosphonates, the enzymes responsible for C-P lyase activity have resisted detection or purification. Genes from E. coli B that support growth on alkylphosphonates as the sole phosphorus source have now been cloned (B. L. Wanner and J. A. Boline, unpublished data). Deletion analysis demonstrated that at least 13 kilobases of DNA information is required for E. coli to express the phosphonate utilization phenotype (Phn+). The complete nucleotide sequence of 15,611 bases has been determined, and the gene structures were examined. Seventeen open reading frames (phnA to phnQ) were identified in one transcriptional direction and five open reading frames in the divergent direction. Sequence homology searches identify PhnC, PhnK, PhnL, and, possibly, PhnN proteins as members of nucleotide-binding proteins of the binding protein-dependent transport systems. Candidates for other membrane components and regulatory proteins are also identified. A Pho box-like promoter sequence is also found upstream of the gene cluster starting at phnA, which is consistent with the observation of phosphate regulation of the Phn+ response. Fourteen repetitive extragenic palindromic sequences are found in the phn DNA: 10 exist in the extragenic region between phnA and phnB, two between phnD and phnE, and two between phnK and phnL. An unusual finding is that one of the repetitive extragenic palindromic sequences actually overlaps with the reading frame of the phnE gene.