As free-living non-motile saprophytes, Streptomyces need to adapt to a wide range of environmental conditions and this is reflected by an enormous diversity of regulatory proteins encoded by, for example, the genome of the model streptomycete Streptomyces coelicolor. In this organism, we have identified a new osmoregulation gene, osaC, encoding a member of a novel family of regulatory proteins. Members of the family have a predicted domain composition consisting of an N-terminal kinase domain related to anti-sigma factors, sensory Pas and Gaf domains, and a C-terminal phosphatase domain. osaC is linked to the response regulator gene osaB; expression analysis of the latter revealed that it is induced after osmotic stress in a sigma(B)-dependent manner. OsaC is required to return osaB and sigB expression back to constitutive levels after osmotic stress. From analysis of the activities of OsaC(DeltaPho), lacking the C-terminal phosphatase domain, and OsaC(N92A), with a substitution of a critical asparagine residue in the kinase domain, we infer that this N-terminal domain functions as a sigma(B) anti-sigma factor. Indeed, co-purification experiments indicate association of OsaC and sigma(B). These results support a model for post-osmotic stress modulation of sigma(B) activity by OsaC.