Escherichia coli FtsH is an essential integral membrane protein that has an AAA-type ATPase domain at its C-terminal cytoplasmic part, which is homologous to at least three ATPase subunits of the eukaryotic 26S proteasome. We report here that FtsH is involved in degradation of the heat-shock transcription factor sigma 32, a key element in the regulation of the E. coli heat-shock response. In the temperature-sensitive ftsH1 mutant, the amount of sigma 32 at a non-permissive temperature was higher than in the wild-type under certain conditions due to a reduced rate of degradation. In an in vitro system with purified components, FtsH catalyzed ATP-dependent degradation of biologically active histidine-tagged sigma 32. FtsH has a zinc-binding motif similar to the active site of zinc-metalloproteases. Protease activity of FtsH for histidine-tagged sigma 32 was stimulated by Zn2+ and strongly inhibited by the heavy metal chelating agent o-phenanthroline. We conclude that FtsH is a novel membrane-bound, ATP-dependent metalloprotease with activity for sigma 32. These findings indicate a new mechanism of gene regulation in E. coli.