The chromosomal ampC beta-lactamase in Citrobacter freundii and Enterobacter cloacae is inducible by beta-lactam antibiotics. When an inducible ampC gene is introduced on a plasmid into Escherichia coli together with its transcriptional regulator ampR, the plasmid-borne beta-lactamase is still inducible. We have isolated mutants, containing alterations in a novel E. coli gene, ampG, in which a cloned C. freundii ampC gene is unable to respond to beta-lactam inducers. The ampG gene was cloned, sequenced and mapped to minute 9.6 on the E. coli chromosome. The deduced amino acid sequence predicted AmpG to be a 53 kDa, transmembrane protein, which we propose acts as a signal transducer or permease in the beta-lactamase induction system. Immediately upstream of ampG there is another 579-base-pair-long open reading frame (ORF) encoding a putative lipoprotein shown to be non-essential for beta-lactamase induction. We have found that ampG and this ORF form an operon, whose promoter is located in front of the ORF. Located closely upstream of the putative promoter is the morphogene bolA, which is transcribed in the opposite orientation. However, using transcription fusions, we have found that the ampG transcription is not regulated by bolA. In addition, we show that transcription is probably not regulated by either the starvation specific sigma factor RpoS, which controls bolA, or by AmpD the negative regulator for ampC transcription.