A gene (sigB) encoding an alternative sigma factor σB in Streptomyces coelicolor A3(2) was isolated and characterized. It encodes a polypeptide of 281 amino acids (31 546 Da) and is highly homologous to Bacillus subtilisσB. The sigB coding region is preceded by four open reading frames (ORFs): dpsA, orfA, rsbB and rsbA in sequential order. RNA analyses revealed that rsbB, rsbA and sigB constitute an operon (sigB operon). Transcripts were produced constitutively from a promoter (sigBp2) upstream of the rsbB coding region, contributing to the basal level expression of σB protein. An inducible promoter (sigBp1) resembling the catB promoter (catBp) was located between the rsbA and sigB coding regions. Transcripts from sigBp1 dramatically increased as cells differentiated on solid media, at the stationary phase in liquid media or by osmotic stresses similar to the behaviour of catBp transcripts. Both catBp and sigBp1 promoters were recognized specifically by σB-containing RNA polymerase in vitro. Disruption of the sigB gene abolished not only the differentiation-associated expression but also the osmotic induction of the catB gene, indicating that catBp is under the control of σB. The sigB mutant exhibited a similar phenotype to the catB mutant, being sensitive to hyperosmolarity, blocked in forming aerial mycelium and with skewed antibiotic production. Therefore, we conclude that σB ensures the proper differentiation and osmoprotection of S. coelicolor cells, primarily via regulation of the expression of catalase B.