The cellobiose catabolic system of Escherichia coli K12 is being used to study the role of cryptic genes in microbial evolution. Wild-type E. coli K12 do not utilize the beta-glucoside sugars, arbutin, salicin and cellobiose. A Cel+ (cellobiose utilizing) mutant which grows on cellobiose, arbutin, and salicin was isolated previously from wild-type E. coli K12. Biochemical assays indicate that a cel structural gene (celT) specifies a single transport protein that is a beta-glucoside specific enzyme of the phosphoenolpyruvate-dependent phosphotransferase system. The transport protein phosphorylates beta-glucosides at the expense of phosphoenolpyruvate. A single phosphoglucosidase, specified by celH, hydrolyzes phosphorylated cellobiose, arbutin, and salicin. The genes of the cel system are expressed constitutively in the Cel+ mutant, whereas they are not expressed at a detectable level in the wild-type strain. The transport and hydrolase genes are simultaneously silenced or simultaneously expressed and thus constitute an operon. Cel+ strains which fail to utilize one or more beta-glucosides express the transport system at a lower level than do Cel+ strains which grow on all three beta-glucosides. Other strains inducibly express a gene which specifies transport of arbutin but not the other beta-glucosides. The arbutin transport gene, arbT, maps outside of the cel locus.