The locations of DNA binding by the proteins involved with positive and negative regulation of transcription initiation of the L-arabinose operon in Escherichia coli have been determined by the DNase I protection method. Two cyclic AMP receptor protein sites were found, at positions -78 to -107 and -121 to -146, an araC protein--arabinose binding site was found at position -40 to -78, and an araC protein-fucose binding site was found at position -106 to -144. These locations, combined with in vivo data on induction of the two divergently oriented arabinose promoters, suggest the following regulatory mechanism: induction of the araBAD operon occurs when cyclic AMP receptor protein, araC protein, and RNA polymerase are all present and able to bind to DNA. Negative regulation is accomplished by the repressing form of araC protein binding to a site in the regulatory region such that it stimultaneously blocks access of cyclic AMP receptor protein to two sites on the DNA, one site of which serves each of the two promoters. Thus, from a single operator site, the negative regulator represses the two outwardly oriented ara promoters. This regulatory mechanism explains the known positive and negative regulatory properties of the ara promoters.