Pterin 4a-carbinolamine dehydratase is bifunctional in mammals. In addition to playing a catalytic role in pterin recycling in the cytoplasm, it plays a regulatory role in the nucleus, where it acts as a dimerization-cofactor component (called DCoH) for the transcriptional activator HNF-1. A thus far unique operon in Pseudomonas aeruginosa contains a gene encoding a homolog (PhhB) of the regulatory dehydratase, together with genes encoding phenylalanine hydroxylase (PhhA) and aromatic aminotransferase (PhhC). Using complementation of tyrosine auxotrophy in Escherichia coli as a functional test, we have found that the in vivo function of PhhA requires PhhB. Strikingly, mammalian DCoH was an effective substitute for PhhB, and either one was effective in trans. Surprisingly, the required presence of PhhB for complementation did not reflect a critical positive regulatory effect of phhB on phhA expression. Rather, in the absence of PhhB, PhhA was found to be extremely toxic in E. coli, probably due to the nonenzymatic formation of 7-biopterin or a similar derivative. However, bacterial PhhB does appear to exert modest regulatory effects in addition to having a catalytic function. PhhB enhances the level of PhhA two- to threefold, as was demonstrated by gene inactivation of phhB in P. aeruginosa and by comparison of the levels of expression of PhhA in the presence and absence of PhhB in Escherichia coli. Experiments using constructs having transcriptional and translational fusions with a lacZ reporter indicated that PhhB activates PhhA at the posttranscriptional level. Regulation of PhhA and PhhB is semicoordinate; both PhhA and PhhB are induced coordinately in the presence of either L-tyrosine or L-phenylalanine, but PhhB exhibits a significant basal level of activity that is lacking for PhhA. Immunoprecipitation and affinity chromatography showed that PhhA and PhhB form a protein-protein complex.