IlvY protein binds cooperatively to tandem operator sites in the divergent, overlapping, promoter-regulatory region of the ilvYC operon of Escherichia coli. IlvY positively regulates the expression of the ilvC gene in an inducer-dependent manner and negatively regulates the transcription of its own divergently transcribed structural gene in an inducer-independent manner. Although binding of IlvY protein to the tandem operators is sufficient to repress ilvY promoter-specific transcription, it is not sufficient to activate transcription from the ilvC promoter. Activation of ilvC promoter-specific transcription requires the additional binding of a small molecule inducer to the IlvY protein-DNA complex. The binding of inducer to IlvY protein does not affect the affinity of IlvY protein for the tandem operator sites. It does, however, cause a conformational change of the IlvY protein-DNA complex, which is correlated with the partial relief of an IlvY protein-induced bend of the DNA helix in the ilvC promoter region. This structural change in the IlvY protein-DNA complex results in a 100-fold increase in the affinity of RNA polymerase binding at the ilvC promoter site. The ability of a protein to regulate gene expression by ligand-responsive modulation of a protein-DNA structure is an emerging theme in gene regulation.