During infection, Streptococcus pneumoniae exists mainly in sessile biofilms rather than in planktonic form, except during sepsis. The capacity to form biofilms is believed to be important for nasopharyngeal colonization as well as disease pathogenesis, but relatively little is known about the regulation of this process. Here, we investigated the effect of exogenous iron [Fe(III)] as well as the role of luxS (encoding S-ribosylhomocysteine lyase) on biofilm formation by S. pneumoniae D39. Fe(III) strongly enhanced biofilm formation at concentrations of ≥50 μM, while Fe(III) chelation with deferoxamine was inhibitory. Importantly, Fe(III) also upregulated the expression of luxS in wild-type D39. A luxS-deficient mutant (D39luxS) failed to form a biofilm, even with Fe(III) supplementation, whereas a derivative overexpressing luxS (D39luxS+) exhibited enhanced biofilm formation capacity and could form a biofilm without added Fe(III). D39luxS exhibited reduced expression of the major Fe(III) transporter PiuA, and the cellular [Fe(III)] was significantly lower than that in D39; in contrast, D39luxS+ had a significantly higher cellular [Fe(III)] than the wild type. The release of extracellular DNA, which is an important component of the biofilm matrix, also was directly related to luxS expression. Similarly, genetic competence, as measured by transformation frequency as well as the expression of competence genes comD, comX, comW, cglA, and dltA and the murein hydrolase cbpD, which is associated with fratricide-dependent DNA release, all were directly related to luxS expression levels and were further upregulated by Fe(III). Moreover, mutagenesis of cbpD blocked biofilm formation. We propose that competence, fratricide, and biofilm formation are closely linked in pneumococci, and that luxS is a central regulator of these processes. We also propose that the stimulatory effects of Fe(III) on all of these parameters are due to the upregulation of luxS expression, and that LuxS provides for a positive Fe(III)-dependent amplification loop by increasing iron uptake.