The AbsA1 sensor kinase and its cognate response regulator AbsA2 are important regulators of antibiotic synthesis in Streptomyces coelicolor. While certain point mutations in absA1 reduce or eliminate the synthesis of several antibiotics, null mutations in these genes bring about enhanced antibiotic synthesis. We show here that AbsA1, which is unusual in sequence and structure, is both an AbsA2 kinase and an AbsA2ϳP phosphatase. The half-life of AbsA2ϳP in solution is 68.6 min, consistent with a role in maintaining a relatively stable state of transcriptional repression or activation. We find that mutations in the absA locus that enhance antibiotic synthesis impair AbsA2 kinase activity and that mutations that repress antibiotic synthesis impair AbsA2ϳP phosphatase activity. These results support a model in which the phosphorylation state of AbsA2 is determined by the balance of the kinase and phosphatase activities of AbsA1 and where AbsA2ϳP represses antibiotic biosynthetic genes either directly or indirectly.