In Aspergillus nidulans, the regulation of gene expression in response to changes in ambient pH is mediated by the PacC zinc finger transcriptional regulator, At alkaline ambient pH, PacC is proteolytically processed to a functional form serving as an activator of alkaline-expressed genes and a repressor of acid expressed genes. This activation of PacC occurs in response to a signal mediated by the products of the pal genes. Thus, the products of the palA, -B, -C, -F, -H, and -I genes constitute an alkaline ambient pH signal transduction pathway. How the pal signal transduction pathway senses ambient pH and transduces a signal to trigger PacC processing is a fascinating unresolved problem. We have cloned and sequenced the palB gene. The predicted palB gene product has similarity to the catalytic domain of the calpain family of calcium-activated cysteine proteases, We have shown, however, that the PalB protein does not catalyze the final step of proteolytic processing of PacC.