polY, a transcriptional regulatory gene in the polyoxin biosynthetic cluster of Streptomyces cacaoi, was analysed, and its deduced product (PolY) showed amino acid sequence homology to AfsR from Streptomyces coelicolor A3(2). PolY contains an OmpR-like DNA binding domain at its N-terminal and an ATPase domain in the middle of the protein. Disruption of polY abolished polyoxin biosynthesis, which could be restored by the integration of a single copy of polY into the chromosome of the disruption mutant. Transcription of polR, a pathway-specific regulatory gene of polyoxin biosynthesis, was controlled by polY. Electrophoretic mobility shift assay and DNase I protection experiments indicated that PolY bound to the promoter region of polR, and the binding site contained a direct nucleotide repeat typical of Streptomyces antibiotic regulatory protein binding sites. PolY exhibited ATPase activity in vitro. Additionally, binding of ADP/ATPgammaS to ATPase domain triggered the oligomerization of PolY and enhanced its DNA binding activity. Consistently, further experiments in vivo demonstrated that changes of ADP/ATP concentrations significantly affected PolY activity in the cell. These results suggested that the ATPase domain might be a sensor of endogenous pool of ADP/ATP, whose change modulated PolY activity under the physiological conditions.