The ilvC gene of Escherichia coli K12 encodes acetohydroxy acid isomeroreductase, the second enzyme in the parallel isoleucine-valine biosynthetic pathway. Previous data have shown that transcription of the ilvC gene is induced by the acetohydroxy acid isomeroreductase substrates, acetohydroxybutyrate or acetolactate, and that this substrate induction of ilvC expression is mediated by a positive activator encoded by the ilvY gene. We report here the isolation and complete nucleotide sequence of the ilvY and ilvC genes. The ilvY and ilvC genes encode polypeptides of Mr 33,200 and 54,000, respectively. In vitro transcription-translation of these gene templates results in the synthesis of gene products of these identical molecular weights. The ilvC gene is transcribed in the same direction as the genes of the adjacent ilvGMEDA operon. The ilvY gene is transcribed in a direction opposite to the ilvC and ilvGMEDA genes. The in vivo transcriptional initiation sites of the ilvY and ilvC genes have been determined by S1 nuclease protection experiments. These transcriptional initiation sites are 45 nucleotides apart, and transcription of the ilvY and ilvC genes is initiated via divergent overlapping promoters. The nucleotide sequence of the ilvY and ilvC promoters and 5'-coding regions of Salmonella typhimurium LT2 have been determined. A comparison of these sequences with E. coli K12 suggests regions important in the promotion, regulation, and translation of the ilvY and ilvC genes. A model is presented in which the ilvY-encoded activator binds to an operator site in the overlapping promoter region and reciprocally regulates the transcription of the ilvY and ilvC genes. The carboxyl-terminal amino acid sequence of threonine deaminase encoded by the ilvA gene of the ilv-GMEDA operon of E. coli K12 has been identified by homology with the previously deduced threonine deaminase amino acid sequence encoded by the ilv1 gene of Saccharomyces cerevisiae. Based on the deduced amino acid sequences of the ilvA and ilvY genes, the translational termination codons for both genes are shown to be separated by 52 nucleotides. The proximity of the ilvA and ilvY genes suggests that the 3'-ends of these transcripts overlap.