In previous studies, we have shown the existence of metabolic remodeling in glucose-grown Escherichia coli MG1655 cells expressing the esterase Orf306 from the opd island of Sphingobium fuliginis. We now show that Orf306-dependent metabolic remodeling is due to regulation of a novel small RNA (sRNA). Endogenous propionate, produced due to the esterase/lipase activity of Orf306, repressed expression of a novel E. coli sRNA, co293. This sRNA post-transcriptionally regulates expression of the transcription factors HcaR and FadR either by inhibiting translation or by destabilizing their transcripts. Hence, repression of co293 expression elevates the levels of HcaR and FadR with consequent activation of alternative carbon catabolic pathways. HcaR activates the hca and MHP operons leading to upregulation of the phenyl propionate and hydroxy phenyl propionate (HPP) degradation pathways. Similarly, FadR stimulates the expression of the transcription factor IclR which negatively regulates the glyoxylate bypass pathway genes, aceBAK.