The two-component system AfsQ1/Q2 of Streptomyces coelicolor was identified in our previous work as a pleiotropic regulator for antibiotic biosynthesis and morphological differentiation under the condition of a minimal medium supplemented with 75 mM glutamate. In this work, we report the dissection of the mechanism underlying the function of AfsQ1/Q2 on antibiotic production and also the identification of the AfsQ1/Q2 regulon. The results showed that AfsQ1/Q2 stimulated antibiotic ACT, RED and CDA production directly through the pathway-specific activator genes actII-ORF4, redZ and cdaR respectively. In addition, expression of sigQ that encodes a sigma factor and is divergently transcribed from afsQ1 was also subject to direct regulation by AfsQ1/Q2. The precise AfsQ1 binding sites in the upstream regions of these target genes were determined by DNase I footprinting assays coupled with site-directed DNA mutagenesis. By computational prediction and functional analysis, at least 17 new AfsQ1 targets were identified, including pstS gene encoding a high-affinity phosphate-binding protein and two developmental genes whiD, bldM. For the AfsQ1/Q2 regulon, an AfsQ1 binding motif comprising the sequence GTnAC-n6-GTnAC has been defined. Interestingly, we found from electrophoretic mobility shift assays and transcriptional analysis that AfsQ1/Q2 can also function as a repressor for nitrogen assimilation, and AfsQ1 can compete with GlnR for the promoter regions of glnA and nirB, suggesting the cross-regulation between AfsQ1/Q2 and GlnR in nitrogen metabolism. These findings suggested that AfsQ1/Q2 is important not only for antibiotic biosynthesis but also in maintaining the metabolic homeostasis of nutrient utilization under the stress of high concentration of glutamate in S. coelicolor.