Lsr2 is a nucleoid-associated protein (NAP) that has been found strictly in actinobacteria, including mycobacteria. It is a functional homolog of histone-like nucleoid-structuring protein (H-NS); it acts as a DNA-bridging protein that plays a role in chromosomal organization and transcriptional regulation. To date, the studies on Lsr2 have focused mainly on Mycobacterium tuberculosis In this study, we analyze the role of Lsr2 as a transcription factor in Mycobacterium smegmatis, a saprophytic bacterium whose natural habitat (soil and water) substantially differs from those of the obligatory mycobacterial pathogens. Our chromatin immunoprecipitation-sequencing (ChIP-seq) data revealed that Lsr2 binds preferentially to AT-rich regions of the M. smegmatis chromosome. We found that Lsr2 acts mainly as a repressor, controlling gene expression either directly by binding promoter regions or indirectly through DNA loop formation and DNA coating. One of the Lsr2-repressed genes encodes polyketide synthase (MSMEG_4727), which is involved in the synthesis of lipooligosaccharides (LOSs). An M. smegmatis strain deprived of Lsr2 produces more LOSs, which is mirrored by changes in the smoothness of cells and their susceptibilities to antibiotics. Unlike M. tuberculosis, M. smegmatis additionally encodes a paralogue of Lsr2, MSMEG_1060, which is a novel member of the mycobacterial NAP family. The Lsr2 and MSMEG_1060 proteins exhibit different DNA binding specificities and chromosomal localizations. Our results suggest that these proteins help M. smegmatis cells cope with stress conditions, including hypoxia and exposure to antibiotics. Thus, the present work provides novel insight into the role of Lsr2 paralogues in the ability of a saprophytic mycobacterial species to adjust to environmental changes.IMPORTANCE Nucleoid-associated proteins (NAPs) are the most abundant proteins involved in bacterial chromosome organization and global transcription regulation. The mycobacterial NAP family includes many diverse proteins; some are unique to actinobacteria, and many are crucial for survival under stress (e.g., HupB and Lsr2) and/or optimal growth conditions (e.g., mycobacterial integration host factor [mIHF]). Here, we present a comprehensive study concerning two functional homologues of mycobacterial H-NS: Lsr2 and its paralogue from M. smegmatis, MSMEG_1060. We found that Lsr2 plays a role in transcriptional regulation, mainly by repressing gene expression via DNA loop formation and/or DNA-coating mechanisms. Intriguingly, the number of Lsr2-mediated genes was found to increase under hypoxia. Compared to Lsr2, MSMEG_1060 exhibits a different DNA binding specificity and chromosomal localization. Since tuberculosis remains a serious worldwide health problem, studies on stress response-mediating agents, such as Lsr2, may contribute to the development of novel antituberculosis drugs.