The bacterial phosphotransferase system (PTS) functions in a variety of regulatory capacities. One of the best characterized of these is the process by which the PTS regulates inducer uptake and catabolite repression. Early genetic and physiological evidence supported a mechanism whereby the phosphorylation state of an enzyme of the PTS, the enzyme III specific for glucose (IIIGlc), allosterically inhibits the activities of a number of permeases and catabolic enzymes, the lactose, galactose, melibiose, and maltose permeases, as well as glycerol kinase. Extensive biochemical evidence now supports this model. Evidence is also available showing that substrate binding to those target proteins enhances their affinities for IIIGlc. In the case of the lactose permease, this positively cooperative interaction represents a well documented example of transmembrane signaling, demonstrated both in vivo and in vitro. Although the PTS-mediated regulation of cyclic AMP synthesis (catabolite repression) is not as well defined from a mechanistic standpoint, a model involving allosteric activation of adenylate cyclase by phospho-IIIGlc, together with the evidence supporting it, is presented. These regulatory mechanisms may prove to be operative in gram-positive as well as gram-negative bacteria, but the former organisms may have introduced variations on the theme by covalently attaching IIIGlc-like moieties to some of the target permeases and catabolic enzymes. It appears likely that the general process of PTS-catalyzed protein phosphorylation-dephosphorylation will prove to be important to the regulation of numerous bacterial physiological processes, including chemotaxis, intermediary metabolism, gene transcription, and virulence.