All living organisms face a variety of environmental stresses that cause the misfolding and aggregation of proteins. To eliminate damaged proteins, cells developed highly efficient stress response and protein quality control systems. We performed a biochemical and structural analysis of the bacterial CtsR/McsB stress response. The crystal structure of the CtsR repressor, in complex with DNA, pinpointed key residues important for high-affinity binding to the promoter regions of heat-shock genes. Moreover, biochemical characterization of McsB revealed that McsB specifically phosphorylates arginine residues in the DNA binding domain of CtsR, thereby impairing its function as a repressor of stress response genes. Identification of the CtsR/McsB arginine phospho-switch expands the repertoire of possible protein modifications involved in prokaryotic and eukaryotic transcriptional regulation.