The bldC locus, required for formation of aerial hyphae in Streptomyces coelicolor, was localized by map-based cloning to the overlap between cosmids D17 and D25 of a minimal ordered library. Subcloning and sequencing showed that bldC encodes a member of a previously unrecognized family of small (58- to 78-residue) DNA-binding proteins, related to the DNA-binding domains of the MerR family of transcriptional activators. BldC family members are found in a wide range of gram-positive and gram-negative bacteria. Constructed DeltabldC mutants were defective in differentiation and antibiotic production. They failed to form an aerial mycelium on minimal medium and showed severe delays in aerial mycelium formation on rich medium. In addition, they failed to produce the polyketide antibiotic actinorhodin, and bldC was shown to be required for normal and sustained transcription of the pathway-specific activator gene actII-orf4. Although DeltabldC mutants produced the tripyrrole antibiotic undecylprodigiosin, transcripts of the pathway-specific activator gene (redD) were reduced to almost undetectable levels after 48 h in the bldC mutant, in contrast to the bldC+ parent strain in which redD transcription continued during aerial mycelium formation and sporulation. This suggests that bldC may be required for maintenance of redD transcription during differentiation. bldC is expressed from a single promoter. S1 nuclease protection assays and immunoblotting showed that bldC is constitutively expressed and that transcription of bldC does not depend on any of the other known bld genes. The bldC18 mutation that originally defined the locus causes a Y49C substitution that results in instability of the protein.