Preliminary observations in a large-scale fermentation process suggested that the lipase expression of Pseudomonas alcaligenes can be switched on by the addition of certain medium components, such as soybean oil. In an attempt to elucidate the mechanism of induction of lipase expression, we have set up a search method for genes controlling lipase expression by use of a cosmid library containing fragments of P. alcaligenes genomic DNA. A screen for lipase hyperproduction resulted in the selection of multiple transformants, of which the best-producing strains comprised cosmids that shared an overlapping genomic fragment. Within this fragment, two previously unidentified genes were found and named lipQ and lipR. Their encoded proteins belong to the NtrBC family of regulators that regulate gene expression via binding to a specific upstream activator sequence (UAS). Such an NtrC-like UAS was identified in a previous study in the P. alcaligenes lipase promoter, strongly suggesting that LipR acts as a positive regulator of lipase expression. The regulating role could be confirmed by down-regulated lipase expression in a strain with an inactivated lipR gene and a threefold increase in lipase yield in a large-scale fermentation when expressing the lipQR operon from the multicopy plasmid pLAFR3. Finally, cell extracts of a LipR-overexpressing strain caused a retardation of the lipase promoter fragment in a band shift assay. Our results indicate that lipase expression in Pseudomonas alcaligenes is under the control of the LipQR two-component system.