The ugp-encoded transport system ofEscherichia coli accumulates sn-glycerol-3-phosphate with high affinity; it is binding protein mediated and part of the pho regulon. Here, we report that glycerophosphoryl diesters (deacylated phospholipids) are also high-affinity substrates for the ugp-encoded system. The diesters are not taken up in an unaltered form but are hydrolyzed during transport to sn-glycerol-3-phosphate plus the corresponding alcohols. The enzyme responsible for this reaction is not essential for the translocation of sn-glycerol-3-pbosphate or for the glycerophosphoryl diesters but can only hydrolyze diesters that are in the process of being transported. Diesters in the periplasm or in the cytoplasm were not recognized, and no enzymatic activity could be detected in cellular extracts. The enzyme is encoded by the last gene in the ugp operon, termed ugpQ. The product of the ugpQ gene, expressed in mniiicells, has an apparent molecular weight of 17,500. We present evidence that only one major phoB-dependent promoter controls afl ugp genes.sn-Glycerol-3-phosphate (G3P) can be utilized by Escherichia coli as the sole source of carbon (24) and of phosphate (36). Being an essential precursor for phospholipids, a sufficient concentration of G3P must be maintained by the cell (6, 33). In the absence of exogenous G3P, this essential intermediate is supplied by the reduction of dihydroxyacetone phosphate via an NADH-linked dehydrogenase, an enzyme that is tightly regulated by G3P (7). The major uptake system for G3P in the presence of Pi, which represses (43) the pho regulon, is the glpT-dependent transport system (22). G3P transport via the glpT-dependent transport system is mediated by exchange against intracellular Pi (1,13). glpT is a member of the glp regulon, which consists of several genes organized into several operons, the products of which are responsible for uptake and catabolism of glycerol and G3P (24). The operon containing glpT harbors a second gene, glpQ, distal to glpT, that codes for a periplasmic glycerophosphoryl diester phosphodiesterase, an enzyme that hydrolyzes deacylated phospholipids to G3P and the corresponding alcohols (20). The glp regulon is induced by elevated levels of cytoplasmic G3P, the induction being controlled by a cytoplasmic repressor, the product of the glpR gene (23). The catabolic nature of the glp regulon is demonstrated by its dependence on the cAMP-catabolite gene activator protein regulatory circuit (24).