Thepaagenes for phenylacetic acid (PA) catabolism encode the best characterized aerobic hybrid route involved in the bacterial degradation of aromatic compounds. Here, we demonstrate that the divergentpaaZandpaaA-Kcatabolic operons ofEscherichia coliare regulated by two genes,paaXY, that form a distinct transcriptional unit driven by thePxpromoter. In vivo and in vitro approaches using purified PaaX regulatory protein revealed that this regulator is able to bind and inhibit the activity ofPxin a phenylacetyl-coenzyme A (PA-CoA) dependent manner. The autoregulation ofpaaXYis due to the competition between PaaX and RNA polymerase for binding to the regulatoryPxpromoter. Whereas a similar mechanism of repression mediated by PaaX was shown to occur at the catabolicPzpromoter; the catabolicPapromoter is inhibited by PaaX by a mechanism that does not involves competition with RNA polymerase. We have shown for the first time that thepaaYgene product is essential for an efficient growth in PA. Purified PaaY was shown to be a trimer in solution with a broad thioesterase activity stimulated by some metals. This thioesterase activity will allow the detoxification of some CoA-intermediates that block the aerobic catabolism of PA, as previously suggested, but also will avoid the accumulation of some CoA derivatives that could behave as antagonists of the inducer effect caused by PA-CoA on the PaaX repressor for an efficient expression of thepaagenes. This regulatory function mediated by PaaY constitutes an additional regulatory checkpoint that makes the circuit that controls the transcription of thepaagenes more complex than previously thought, and it could represent a general strategy present in most bacterialpaagene clusters that also harbour thepaaYgene.