The high-affinity siderophore salicylate is an intermediate in the biosynthetic pathway of pyochelin, another siderophore and chelator of transition metal ions, in Pseudomonas aeruginosa. The 2.5-kb region upstream of the salicylate biosynthetic genes pchBA was sequenced and found to contain two additional, contiguous genes, pchD and pchC, having the same orientation. The deduced amino acid sequence of the 60-kDa PchD protein was similar to those of the EntE protein (2,3-dihydroxybenzoate-AMP ligase) of Escherichia coli and other adenylate-forming enzymes, suggesting that salicylate might be adenylated at the carboxyl group by PchD. The 28-kDa PchC protein showed similarities to thioesterases of prokaryotic and eukaryotic origin and might participate in the release of the product(s) formed from activated salicylate. One potential product, dihydroaeruginoate (Dha), was identified in culture supernatants of iron-limited P. aeruginosa cells. The antifungal antibiotic Dha is thought to arise from the reaction of salicylate with cysteine, followed by cyclization of cysteine. Inactivation of the chromosomal pchD gene by insertion of the transcription and translation stop element omega Sm/Sp abolished the production of Dha and pyochelin, implying that PchD-mediated activation of salicylate may be a common first step in the synthesis of both metabolites. Furthermore, the pchD::omega Sm/Sp mutation had a strong polar effect on the expression of the pchBA genes, i.e., on salicylate synthesis, indicating that the pchDCBA genes constitute a transcriptional unit. A full-length pchDCBA transcript of ca. 4.4 kb could be detected in iron-deprived, growing cells of P. aeruginosa. Transcription of pchD started at tandemly arranged promoters, which overlapped with two Fur boxes (binding sites for the ferric uptake regulator) and the promoter of the divergently transcribed pchR gene encoding an activator of pyochelin biosynthesis. This promoter arrangement allows tight iron-mediated repression of the pchDCBA operon.