In addition to effecting the catalysis of sugar uptake, the bacterial phosphoenolpyruvate:sugar phosphotransferase system regulates a variety of physiological processes. Exposure of cells to glucose can result in repression or induction of gene expression. While the mechanism for carbon catabolite repression by glucose was well documented, that for glucose induction was not clearly understood in Escherichia coli. Recently, glucose induction of several E.coli genes has been shown to be mediated by the global repressor Mlc. Here, we elucidate a general mechanism for glucose induction of gene expression in E.coli, revealing a novel type of regulatory circuit for gene expression mediated by the phosphorylation state-dependent interaction of a membrane-bound protein with a repressor. The dephospho-form of enzyme IICB(Glc), but not its phospho-form, interacts directly with Mlc and induces transcription of Mlc-regulated genes by displacing Mlc from its target sequences. Therefore, the glucose induction of Mlc-regulated genes is caused by dephosphorylation of the membrane-bound transporter enzyme IICB(Glc), which directly recruits Mlc to derepress its regulon.