PlcR is a pleiotropic regulator that activates the expression of genes encoding various virulence factors, such as phospholipases C, proteases and hemolysins, in Bacillus thuringiensis and Bacillus cereus. Here we show that the activation mechanism is under the control of a small peptide: PapR. The papR gene belongs to the PlcR regulon and is located 70 bp downstream from plcR. It encodes a 48-amino-acid peptide. Disruption of the papR gene abolished expression of the PlcR regulon, resulting in a large decrease in hemolysis and virulence in insect larvae. We demonstrated that the PapR polypeptide was secreted, then reimported via the oligopeptide permease Opp. Once inside the cell, a processed form of PapR, presumably a pentapeptide, activated the PlcR regulon by allowing PlcR to bind to its DNA target. This activating mechanism was found to be strain specific, with this specificity determined by the first residue of the penta peptide.