Proteins that execute different and/or opposing reactions depending on environmental conditions provide an opportunity to explore molecular switches. By and large, phosphorylation and dephosphorylation of proteins are carried out by separate factors, although there are proteins that catalyze both activities. One example is the group of kinases of the bacterial two-component systems that often act also as phosphatases of their cognate response regulators, e.g., EnvZ and NRII, but apparently they do so by stimulating autodephosphorylation by the regulators (35, 55). Another example is provided by proteins of the phosphoenolpyruvate-dependent phosphotransferase system (PTS). Most phosphorylation reactions carried out by PTS proteins are reversible, and the direction of the reaction being catalyzed depends on carbohydrate availability (5, 56). This report focuses on BglF, which serves as a paradigm for a group of PTS sugar permeases that control expression of sugar utilization genes by reversibly phosphorylating transcriptional antiterminators depending on the availability of their cognate sugars (reviewed in references 1 and 67). BglF, the β-glucoside phosphotransferase from Escherichia coli, negatively regulates expression of the bgl (β-glucosides utilization) operon in the absence of β-glucosides by phosphorylating the BglG transcription factor, thus inhibiting its activity as an antiterminator; upon addition of β-glucosides, BglF dephosphorylates BglG, allowing it to dimerize and antiterminate transcription of the bgl operon (2, 3, 4). In addition to negative regulation by BglF-like sugar permeases, BglG homologues from gram-positive organisms have been shown to be positively regulated by HPr-catalyzed phosphorylation in the presence of their cognate sugar (see, e.g., references 40 and 45). As for BglG, there are conflicting reports about its possible phosphorylation by HPr (see Discussion). In any case, in the absence of β-glucosides, BglF directly phosphorylates BglG; upon β-glucoside addition, BglF dephosphorylates BglG in a manner that does not depend on the general PTS proteins (2, 10) (see Discussion). Notably, the same active site in BglF, Cys24, phosphorylates both the sugar and the BglG protein and also accepts the phosphate from phospho-BglG (P-BglG) (10, 13). The mechanism by which the sugar shifts the balance and triggers BglF to switch from the nonstimulated mode to the stimulated mode is still poorly understood. BglF consists of three domains, A, B, and C. The A and B domains are hydrophilic, the latter containing the active-site cysteine. The two hydrophilic domains are connected by the hydrophobic C domain, which presumably forms the sugar translocation channel and at least part of the sugar-binding site (43). The C domain was recently proposed to contain, in addition to eight transmembrane (TM) helices, a reentrant loop and a segment with inherent dynamics, both speculated to be implicated in BglF function(s) (70). Catalysis of the sugar-stimulated functions involves specific interactions between the active-site-containing domain and the membrane domain (12; also S. Yagur-Kroll and O. Amster-Choder, unpublished observations). The use of the same active site for all the (de)phosphorylation reactions that BglF catalyzes suggests that the protein contains different recognition sites for the various substrates, i.e., BglG, P-BglG, and the sugar. A likely scenario is that binding of the sugar shifts the equilibrium by exposing a recognition site for P-BglG. The finding that both the active-site-containing B domain and the membrane C domain are required for BglG dephosphorylation and sugar phosphotransfer, whereas the active-site-containing B domain alone is sufficient for BglG phosphorylation (8), suggests that a site(s) within the membrane C domain is involved in P-BglG dephosphorylation. To address the question of how the different functions of BglF are coordinated and to study the structural components involved in the opposing functions of BglF, we attempted to isolate BglF mutants that can inhibit BglG activity by phosphorylation but cannot relieve the inhibition by dephosphorylation, i.e., mutants in which the balance is shifted toward BglG phosphorylation. Such mutants were isolated using random mutagenesis and an in vivo screen based on BglG-mediated antitermination of a reporter gene. The mutations, mostly single amino acid substitutions, were mapped to the B and C domains of BglF. As expected, many of the mutants were also impaired in sugar phosphotransfer, an activity which is coupled to dephosphorylation of P-BglG, but some demonstrated normal or almost normal phosphotransfer activity. The residues whose substitution affected just the ability of BglF to dephosphorylate BglG are located in the membrane C domain, either in the TMs flanking the reentrant loop or in the dynamic segment, i.e., in regions suggested to be involved in function, based on biochemical analyses of BglF membrane topology (70). We present biochemical evidence that one of these residues is spatially proximal to the active-site cysteine in the hydrophilic B domain. Bioinformatic analyses propose that this position is part of a novel motif in BglF homologues. This motif resembles a motif found in ion channels and may perhaps be involved in phosphate delivery. Using a second genetic screen, we isolated BglG mutants that suppress the defect in the BglF mutants and restore their ability to dephosphorylate P-BglG.