The synthesis of the inducible enzyme penicillinase of Bacillus licheniformis is negatively controlled by a repressor (D.A. Dubnau and M.R. Pollock, J. Gen. Microbiol. 41:7-21, 1965; D. J. Sherratt and J. F. Collins, J. Gen. Microbiol. 76:217-230,1973). The molecular organization of the genes coding for penicillinase (penP) and its repressor (penI) has recently been determined (T. Himeno, T. Imanaka, and S. Aiba, J. Bacteriol. 168:1128-1132, 1986). These two genes are transcribed divergently from within a 364-nucleotide region separating the coding sequences. We cloned and sequenced the repressor gene (penIc) from strain 749/C that constitutively produces penicillinase. The penIc and penI+ (wild-type) genes were expressed in Escherichia coli. Complementation analysis indicated that the repressor is the only trans-acting protein required to regulate the expression of the penI and penP genes. We purified the wild-type repressor protein, used it in gel retardation and DNase I protection experiments, and identified three operators positioned in the region between the penP and penI coding sequences. The spatial arrangement of the operators and the hierarchy in repressor binding seen in the protection experiments indicate that (i) the penI gene product represses the expression of the penP gene by physically blocking the RNA polymerase-binding site and (ii) the penI gene is autoregulated.