The synthesis of virulence factors and other exoproteins in Staphylococcus aureus is controlled by the global regulator, agr. Expression of secreted proteins is up-regulated in the postexponential growth phase, whereas expression of surface proteins is down-regulated by agr. The agr locus consists of two divergent operons, transcribed from neighboring but non-overlapping promoters, P2 and P3. The P2 operon sequence, reported here, contains 4 open reading frames, agrA, C, D, and B, of which A and C appear to encode proteins of a classical 2-component signal transduction pathway. The P3 operon specifies a 0.5 kb transcript, RNA III, which is the actual effector of the agr response, and, incidentally, encodes the agr-regulated peptide delta-hemolysin. Transcriptional fusions have shown that both P2 and P3 are agr sensitive (function in an agr+ but not in an agr- background) and deletion analysis has shown that all four of the P2 ORFs are involved; agrA and agrC seem to be absolutely required for the transcriptional activation of the agr locus, whereas agrB and agrD seem to be partially required. Since transcription of P2 requires P2 operon products, the P2 operon is autocatalytic, and is thus admirably suited to the need for rapid production of exoproteins at a time when overall growth is coming to a halt.