A bioassay was developed to identify stimuli that promote the transcriptional induction of the algD operon for alginate biosynthesis in Pseudomonas aeruginosa. Strain PAO1 carried the algD promoter fused to a chloramphenicol acetyl-transferase cartridge (PalgD-cat), and > 50 compounds were tested for promoting chloramphenicol resistance. Most compounds showing PalgD-cat induction were cell wall-active antibiotics that blocked peptidoglycan synthesis. PalgD-cat induction was blocked by mutations in the genes for σ22 (algT/algU) or regulators AlgB and AlgR. Anti-sigma factor MucA was the primary regulator of σ22 activity. A transcriptome analysis using microarrays verified that the algD operon undergoes high induction by d-cycloserine. A similar σE–RseAB complex in Escherichia coli responds to envelope stress, which requires DegS protease in a regulated intramembrane proteolysis (RIP) cascade to derepress the sigma. Mutant phenotypic studies in P. aeruginosa showed that AlgW (PA4446) is likely to be the DegS functional homologue. A mutation in algW resulted in a complete lack of PalgD-cat induction by d-cycloserine. Overexpression of algW in PAO1 resulted in a mucoid phenotype and alginate production, even in the absence of cell wall stress, suggesting that AlgW protease plays a role in σ22 activation. In addition, a mutation in gene PA3257 (prc), encoding a Prc-like protease, resulted in poor induction of PalgD-cat by d-cycloserine, suggesting that it also plays a role in the response to cell wall stress.