Haemolysin II, HlyII, is one of several cytotoxic proteins produced by Bacillus cereus, an opportunistic human pathogen that causes food poisoning. The hlyII gene confers haemolytic activity to Escherichia coli cells. Here a new B. cereus gene, hlyIIR, which is located immediately downstream of hlyII and regulates hlyII expression, is reported. The deduced amino acid sequence of HlyIIR is similar to prokaryotic DNA-binding transcriptional regulators of the TetR/AcrA family. Measurements of haemolytic activity levels and of hlyII promoter activity levels using gene fusions and primer-extension assays demonstrated that, in E coli, hlyII transcription decreased in the presence of hlyIIR. Recombinant HlyIIR binds to a 22 bp inverted DNA repeat centred 48 bp upstream of the hlyII promoter transcription initiation point. In vitro transcription studies showed that HlyIIR inhibits transcription from the hlyII promoter by binding to the 22 bp repeat and RNA polymerase, and by decreasing the formation of the catalytically competent open promoter complex.