DNA sequence analysis of a 7.5 kb XhoI DNA fragment from the region flanking the nikkomycin biosynthesis gene cluster in Streptomyces ansochromogenes revealed one 3.3 kb open reading frame (ORF), designated sanG. The deduced product of sanG (1061 amino acids), which is similar to PimR of Streptomyces natalensis, contains an OmpR-like DNA binding domain in its N-terminal portion and A- and B-type nucleotide binding motifs in the middle of the protein. Disruption of sanG abolished nikkomycin biosynthesis, reduced sporulation and led to brown pigment accumulation. All aspects of this complex phenotype were complemented by a single copy sanG which was integrated into the chromosome. The introduction of multiple copies of sanG resulted in increased nikkomycin production. S1 mapping results indicated that sanG is transcribed from at least three promoters (P1, P2 and P3), P1 being strongly upregulated when production of nikkomycins starts. Two putative transcription units for nikkomycin biosynthesis, starting from sanN and sanO, are dependent on the expression of sanG, whereas a putative transcription unit starting from sanF was not regulated by sanG. These results suggested that sanG encodes a transcriptional activator important for nikkomycin biosynthesis that, unusually, also has pleiotropic effects on secondary metabolism and development.