The NIFL regulatory protein controls transcriptional activation of nitrogen fixation (nif) genes in Azotobacter vinelandii by direct interaction with the enhancer binding protein NIFA. Modulation of NIFA activity by NIFL, in vivo occurs in response to external oxygen concentration or the level of fixed nitrogen. Spectral features of purified NIFL and chromatographic analysis indicate that it is a flavoprotein with FAD as the prosthetic group, which undergoes reduction in the presence of sodium dithionite. Under anaerobic conditions, the oxidized form of NIFL inhibits transcriptional activation by NIFA in vitro, and this inhibition is reversed when NIFL is in the reduced form. Hence NIFL is a redox-sensitive regulatory protein and may represent a type of flavoprotein in which electron transfer is not coupled to an obvious catalytic activity. In addition to its ability to act as a redox sensor, the activity of NIFL is also responsive to adenosine nucleotides, particularly ADP. This response overrides the influence of redox status on NIFL and is also observed with refolded NIFL apoprotein, which lacks the flavin moiety. These observations suggest that both energy and redox status are important determinants of nif gene regulation in vivo.