An unusual system of genetic exchange exists in the purple nonsulfur bacterium Rhodobacter capsulatus. DNA transmission is mediated by a small bacteriophage-like particle called the gene transfer agent (CTA) that transfers random 4.5-kb segments of the producing cell's genome to recipient cells, where allelic replacement occurs. This paper presents the results of gene cloning, analysis, and mutagenesis experiments that show that GTA resembles a defective prophage related to bacteriophages from diverse genera of bacteria, which has been adopted by R. capsulatus for genetic exchange. A pair of cellular proteins, CckA and CtrA, appear to constitute part of a sensor kinase/response regulator signaling pathway that is required for expression of GTA structural genes. This signaling pathway controls growth-phase-dependent regulation of GTA gene messages, yielding maximal gene expression in the stationary phase. We suggest that GTA is an ancient prophage remnant that has evolved in concert: with the bacterial genome, resulting in a genetic exchange process controlled by the bacterial cell.