The right operator of bacteriophage λ, O R, contains three sites, each of which is recognized by two regulatory proteins. These proteins are the λ repressor, the product of the cI gene, and the cro gene product. The interactions of these proteins with O R results in a variety of regulatory effects on transcription from the adjacent promoters P R and P RM. One purpose of this and the accompanying papers is to determine the roles played by each operator site in mediating these effects. The experiments described herein analyse the regulation of P R and P RM in vivo as a function of λ repressor or cro protein concentration. To accomplish this we utilized two types of hybrid operons constructed by recombination in vitro. One type, carried on a phage vector, bears the lacZ gene fused either to the λ P R or the λ P RM. In cells lysogenic for one of these phages, the level of β-galactosidase is a measure of the activity of P R or P RM. In the other type of hybrid operon, carried on a plasmid, a λ cI or cro gene is fused to the lac promoter and synthesis of the λ regulatory protein is controlled by the lac repressor. Cells bearing one of these plasmids synthesize increased amounts of λ repressor or cro in response to increased amounts of IPTG. In a typical experiment, therefore, we measured the synthesis of β-galactosidase, as a function of IPTG concentration, in a cell bearing one of the phage vectors (as prophage) plus one of the plasmids. The roles of the O R sites in regulating P R and P RM were revealed by studying the behavior of mutants, some newly isolated, bearing sequence changes in O R. All but one of these mutations is located in O R1, O R2, or O R3, and each decreases the affinity of the corresponding site for the regulatory proteins. The other, prmup-1, is located between O R2 and O R3. Whereas wild-type P RM functions efficiently only in the presence of repressor, prmup-1 allows initiation to occur at P RM at high frequency in the absence of repressor. Our main results may be summarized as follows. (1) Occupation of O R1 or O R2 (or both) by either protein represses P R. (2) Occupation of O R3 by either protein represses P RM. (3) Repressor bound only to O R2 stimulates P RM. In a lysogen, P R is repressed and P RM is stimulated because repressor is bound predominantly to O R1 and O R2 but rarely to O R3. In contrast, as the concentration of cro protein accumulates in vivo, first P RM is turned off as O R3 is occupied and then P R is turned off as O R1 and O R2 are occupied. We show that these facts explain the contrasting physiological effect of these two regulatory proteins. We present a molecular model to explain the mechanism of each of these regulatory effects which takes into account the rules describing co-operative binding of repressor to sites in O R (Johnson et al., 1979).