In the murine model of infection, a Mycobacterium tuberculosis mce1 operon mutant elicits an aberrant granulomatous response, resulting in uncontrolled replication and failure to enter a persistent state. In this study, we demonstrate that the mce1 genes can be transcribed as a 13-gene polycistronic message encompassing Rv0166 to Rv0178. Quantitative reverse transcriptase PCR and immunoblot analyses revealed that the mce1 genes and proteins are expressed during in vitro growth but are significantly down-regulated in intracellular bacilli isolated from murine macrophages. A homologue of the FadR subfamily of GntR transcriptional regulators, Rv0165c (designated Mce1R), lies upstream and is divergently transcribed from the operon. To investigate whether this gene plays a role in regulation of mce1 expression, we created an M. tuberculosis mce1R deletion mutant. There was no difference in expression of mce1 operon genes in Deltamce1R compared to expression in the wild type during logarithmic growth in vitro. However, in bacilli isolated from murine macrophages, expression of mce1 genes was significantly higher in Deltamce1R. In addition, overexpression of mce1R resulted in repression of the mce1 genes. These data demonstrate that Mce1R is a negative regulator that acts intracellularly to repress expression of the mce1 operon. We propose that Mce1R facilitates balanced temporal expression of the mce1 products required for organized granuloma formation, which is both protective to the host and necessary for the persistence of M. tuberculosis.