Arsenic (As) is the most common toxic element in the environment, ranking first on the Superfund List of Hazardous Substances. Microbial redox transformations are the principal drivers of As chemical speciation, which in turn dictates As mobility and toxicity. Consequently, in order to manage or remediate environmental As, land managers need to understand how and why microorganisms react to As. Studies have demonstrated a two-component signal transduction system comprised of AioS (sensor kinase) and AioR (response regulator) is involved in regulating microbial AsIII oxidation, with the AsIII oxidase structural genes aioB and aioA being upregulated by AsIII. However, it is not known whether AsIII is first detected directly by AioS or by an intermediate. Herein we demonstrate the essential role of a periplasmic AsIII-binding protein encoded by aioX, which is upregulated by AsIII. An ΔaioX mutant is defective for upregulation of the aioBA genes and consequently AsIII oxidation. Purified AioX expressed without its TAT-type signal peptide behaves as a monomer (MW 32 kDa), and Western blots show AioX to be exclusively associated with the cytoplasmic membrane. AioX binds AsIII with a KD of 2.4 µM AsIII; however, mutating a conserved Cys108 to either alanine or serine resulted in lack of AsIII binding, lack of aioBA induction, and correlated with a negative AsIII oxidation phenotype. The discovery and characterization of AioX illustrates a novel AsIII sensing mechanism that appears to be used in a range of bacteria and also provides one of the first examples of a bacterial signal anchor protein.