The enzymatic reduction of molecular nitrogen to ammonia requires high amounts of energy, and the presence of oxygen causes the catalyzing nitrogenase complex to be irreversible inactivated. Thus nitrogen-fixing microorganisms tightly control both the synthesis and activity of nitrogenase to avoid the unnecessary consumption of energy. In the free-living diazotrophs Klebsiella pneumoniae and Azotobacter vinelandii, products of the nitrogen fixation nifLA operon regulate transcription of the other nifoperons. NifA activates transcription of nif genes by the alternative form of RNA-polymerase, sigma54-holoenzyme; NifL modulates the activity of the transcriptional activator NifA in response to the presence of combined nitrogen and molecular oxygen. The translationally-coupled synthesis of the two regulatory proteins, in addition to evidence from studies of NifL/NifA complex formation, imply that the inhibition of NifA activity by NifL occurs via direct protein-protein interaction in vivo. The inhibitory function of the negative regulator NifL appears to lie in the C-terminal domain, whereas the N-terminal domain binds FAD as a redox-sensitive cofactor, which is required for signal transduction of the internal oxygen status. Recently it was shown, that NifL acts as a redox-sensitive regulatory protein, which modulates NifA activity in response to the redox-state of its FAD cofactor, and allows NifA activity only in the absence of oxygen. In K. pneumoniae, the primary oxygen sensor appears to be Fnr (fumarate nitrate reduction regulator), which is presumed to transduce the signal of anaerobiosis towards NifL by activating the transcription of gene(s) whose product(s) function to relieve NifL inhibition through reduction of the FAD cofactor. In contrast, the reduction of A. vinelandii-NifL appears to occur unspecifically in response to the availability of reducing equivalents in the cell. Nitrogen status of the cells is transduced towards the NifL/NifA regulatory system by the GlnK protein, a paralogue PII-protein, which appears to interact with the NifL/NifA regulatory system via direct protein-protein interaction. It is not currently known whether GlnK interacts with NifL alone or affects the NifL/NifA-complex; moreover the effects appear to be the opposite in K. pneumoniae and A. vinelandii. In addition to these environmental signals, adenine nucleotides also affect the inhibitory function of NifL; in the presence of ATP or ADP the inhibitory effect on NifA activity in vitro is increased. The NifL proteins from the two organisms differ, however, in that stimulation of K. pneumoniae-NifL occurs only when synthesized under nitrogen excess, and is correlated with the ability to hydrolyze ATP. In general, transduction of environmental signals to the nif regulatory system appears to involve a conformational change of NifL or the NifL/NifA complex. However, experimental data suggest that K. pneumoniae and A. vinelandii employ significantly different species-specific mechanisms of signal transduction.