The FNR (fumarate and nitrate reductase regulation) protein of Escherichia coli is an oxygen-responsive transcriptional regulator required for the switch from aerobic to anaerobic metabolism. In the absence of oxygen, FNR changes from the inactive to the active state. The sensory and the regulatory functions reside in separate domains of FNR. The sensory domain contains a Fe-S cluster, which is of the [4Fe-4S]2+ type under anaerobic conditions. It is suggested that oxygen is supplied to the cytoplasmic FNR by diffusion and inactivates FNR by direct interaction. Reactivation under anoxic conditions requires cellular reductants. In vitro, the Fe-S cluster is converted to a [3Fe-4S]+ or a [2Fe-2S]2+ cluster by oxygen, resulting in FNR inactivation. After prolonged incubation with oxygen, the Fe-S cluster is destroyed. Reassembly of the [4Fe-4S]2+ cluster might require cellular proteins, such as the NifS-like protein of E. coli. In this review, the rationale for regulation of alternative metabolic pathways by FNR and other oxygen-dependent regulators is discussed. Only the terminal reductases of respiration, and not the dehydrogenases, are regulated in such a way as to achieve maximal H+/e- ratios and ATP yields.