The rich knowledge of operon organization in Escherichia coli, together with the completed chromosomal sequence of this bacterium, enabled us to perform an analysis of distances between genes and of functional relationships of adjacent genes in the same operon, as opposed to adjacent genes in different transcription units. We measured and demonstrated the expected tendencies of genes within operons to have much shorter intergenic distances than genes at the borders of transcription units. A clear peak at short distances between genes in the same operon contrasts with a flat frequency distribution of genes at the borders of transcription units. Also, genes in the same operon tend to have the same physiological functional class. The results of these analyses were used to implement a method to predict the genomic organization of genes into transcription units. The method has a maximum accuracy of 88% correct identification of pairs of adjacent genes to be in an operon, or at the borders of transcription units, and correctly identifies around 75% of the known transcription units when used to predict the transcription unit organization of the E. coli genome. Based on the frequency distance distributions, we estimated a total of 630 to 700 operons in E. coli. This step opens the possibility of predicting operon organization in other bacteria whose genome sequences have been finished.