The formation of biofilms by the opportunistic pathogen Pseudomonas aeruginosa is a developmental process governed by a novel signal transduction system composed of three two-component regulatory systems (TCSs), BfiSR, BfmSR, and MifSR. Here, we show that BfiSR-dependent arrest of biofilm formation coincided with reduced expression of genes involved in virulence, posttranslational/transcriptional modification, and Rhl quorum sensing but increased expression of rhlAB and the small regulatory RNAs rsmYZ. Overexpression of rsmZ, but not rsmY, coincided with impaired biofilm development similar to inactivation of bfiS and retS. We furthermore show that BfiR binds to the 5' untranslated region of cafA encoding RNase G. Lack of cafA expression coincided with impaired biofilm development and increased rsmYZ levels during biofilm growth compared to the wild type. Overexpression of cafA restored ΔbfiS biofilm formation to wild-type levels and reduced rsmZ abundance. Moreover, inactivation of bfiS resulted in reduced virulence, as revealed by two plant models of infection. This work describes the regulation of a committed biofilm developmental step following attachment by the novel TCS BfiSR through the suppression of sRNA rsmZ via the direct regulation of RNase G in a biofilm-specific manner, thus underscoring the importance of posttranscriptional mechanisms in controlling biofilm development and virulence.