The biosynthesis of the antifungal pimaricin in Streptomyces natalensis is very sensitive to phosphate regulation. Concentrations of inorganic phosphate above 1mM drastically reduced pimaricin production. At 10mM phosphate, expression of all the pimaricin biosynthesis (pim) genes including the pathway-specific positive regulator pimR is fully repressed. The phoU-phoR-phoP cluster of S. natalensis encoding two-component Pho system was cloned and sequenced. Binding of the response regulator PhoP to the consensus PHO boxes in the phoU-phoRP intergenic promoter region was observed. A phoP-disrupted mutant and a phoR-phoP deletion mutant were obtained. Production of pimaricin in these two mutants increased up to 80% in complex yeast extract-malt extract (YEME) or NBG media and showed reduced sensitivity to phosphate control. Four of the pim genes, pimS1, pimS4, pimC and pimG showed increased expression in the phoP-disrupted mutant. However, no consensus PHO boxes were found in the promoter regions of any of the pim genes, suggesting that phosphate control of these genes is mediated indirectly by PhoR-PhoP involving modification of pathway-specific regulators.