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 (GTA) 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.