Several soybean genotypes have been identified which specifically exclude modulation by members of Bradyrhizobiumjaponicum serocluster 123. We have identified and sequenced a DNA region from B. japonicum strain USDA 110 which is involved in genotype-specifc modulation of soybeans. This 2.3-kilobase region, cloned in pMJS12, allows B. japonicum serocluster 123 isolates to form nodules on plants of serogroup 123-restricting genotypes. The nodules, however, were ineffective for symbiotic nitrogen fixation. The nodulation-complementing region is located approximately 590 base pairs transcriptionally downstream from nodD2. The 5' end of pMJS12 contains a putative open reading frame (ORF) of 710 base pairs, termed nowl. Transposon Tn3-HoHo mutations only within the ORF abolished modulation complementation. The N terminus of the predicted noL4 gene product has strong similarity with the N terminus of MerR, the regulator of mercury resistance genes. Translational IacZ fusion experiments indicated that nolA was moderately induced by soybean seed extract and the isoflavone genistein. Restriction fragments that hybridize to pMJS12 were detected in genomic DNAs from both nodulation-restricted and -unrestricted strains.