To adapt to anaerobic conditions, Escherichia coli operates the Arc two-component signal transduction system, consisting of a sensor kinase, ArcB, and a response regulator, ArcA. ArcA is converted to the active form, phosphorylated ArcA (ArcA-P), by ArcB-mediated phosphorylation. The active ArcA-P binds to the promoter regions of target genes, thereby regulating their transcriptional activities. The phosphoryl group of ArcA-P is unstable with a half-life of 30 min. However, we were able to inhibit the dephosphorylation for more than 12 h by the addition of EDTA; this allowed us to characterize ArcA-P. Gel-filtration and glycerol sedimentation experiments demonstrated that ArcA exists as a homo-dimer. ArcA phosphorylated by either ArcB or carbamyl phosphate multimerizes to form a tetramer of dimers; this multimer binds to the ArcA DNA binding site. Isoelectric focusing gel electrophoresis and nitrocellulose-filter binding analyses indicated that the ArcA multimer is composed of both ArcA-P and ArcA in a ratio, 1:1. The ArcA(D54E) mutant protein was unable to be phosphorylated by ArcB. This defect resulted in the inability of ArcA(D54E) to form a multimer or to bind to the ArcA DNA binding site. These results indicate that phosphorylation of ArcA induces multimerization prior to DNA binding, and the multimerization is a prerequisite for binding. Our results suggest a novel model that phosphorylation of ArcA by ArcB regulates multimerization of ArcA, which in turn functions as a response regulator.