Random transcription fusions with Mu d1(Kan lac) generated three mutants in Rhizobium fredii (strain USDA 201) which showed induction of beta-galactosidase when grown in root exudate of the host plants Glycine max, Phaseolus vulgaris, and Vigna ungliculata. Two genes were isolated from a library of total plasmid DNA of one of the mutants, 3F1. These genes, present in tandem on a 4.2-kilobase HindIII fragment, appear in one copy each on the symbiotic plasmid and do not hybridize to the Rhizobium meliloti common nodulation region. They comprise two separate transcriptional units coding for about 450 and 950 nucleotides, both of which are transcribed in the same direction. The two open reading frames are separated by 586 base pairs, and the 5H regions of the two genes show a common sequence. No similarity was found with the promoter areas of Rhizobium trifolii, R. meliloti, or Bradyrhizobium japonicum nif genes and with any known nodulation genes. Regions homologous to both sequences were detected in EcoRI digests of genomic DNAs from B. japonicum USDA 110, USDA 122, and 61A76, but not in genomic DNA from R. trifolii, Rhizobium leguminosarum, or Rhizobium phaseoli. Mass spectrometry and nuclear magnetic resonance analysis indicated that the inducing compound has properties of 4',7-dihydroxyisoflavone, daidzein. These results suggest that, in addition to common nodulation genes, several other genes appear to be specifically induced by compounds in the root exudate of the host plants.