To analyse nod gene expression in Rhizobium leguminosarum, a broad host-range lacZ protein fusion vector was constructed. Two protein fusions, nodC-lacZ and nodD-lacZ, were used to measure the regulation of expression of the promoters of the nodA,B,C and the nodD transcripts by measuring the induced levels of beta-galactosidase activity in R. leguminosarum. In the absence of plant root exudate the nodD-lacZ hybrid was expressed but the nodC-lacZ hybrid was not. The expression of the nodD-lacZ hybrid was repressed in R. leguminosarum strains containing an intact cloned nodD gene indicating that the nodD gene is autoregulatory. The induction of the nodC-lacZ hybrid required both the nodD gene and a component present in plant root exudate. Therefore the nodD gene acts both as a repressor and as an activator of gene expression. The nodD gene is adjacent to nodA and transcribed divergently from nodA,B,C with only approximately 300 nucleotides between the coding regions of nodA and nodD. Within this intergenic region is a unique BclI site and, using nodC-lacZ or nodD-lacZ translational fusions with this BclI site as an end point, no induction of nodC-lacZ or nodD-lacZ was observed. Therefore the promoters of nodD and nodA,B,C overlap at least at this region, and the regulation of these overlapping promoters appears to be controlled by the nodD protein which becomes an activator only in the presence of a component from plant exudate.