The rice pathogen recognition receptor, XA21, confers resistance to Xanthomonas oryzae pv. oryzae strains producing the type one system-secreted molecule, AvrXA21. X. oryzae pv. oryzae requires a regulatory two-component system (TCS) called RaxRH to regulate expression of eight rax (required for AvrXA21 activity) genes and to sense population cell density. To identify other key components in this critical regulatory circuit, we assayed proteins expressed in a raxR gene knockout strain. This survey led to the identification of the phoP gene encoding a response regulator that is up-regulated in the raxR knockout strain. Next we generated a phoP knockout strain and found it to be impaired in X. oryzae pv. oryzae virulence and no longer able to activate the response regulator HrpG (hypersensitive reaction and pathogenicity G) in response to low levels of Ca2+. The impaired virulence of the phoP knockout strain can be partially complemented by constitutive expression of hrpG, indicating that PhoP controls a key aspect of X. oryzae pv. oryzae virulence through regulation of hrpG. A gene encoding the cognate putative histidine protein kinase, phoQ, was also isolated. Growth curve analysis revealed that AvrXA21 activity is impaired in a phoQ knockout strain as reflected by enhanced growth of this strain in rice lines carrying XA21. These results suggest that the X. oryzae pv. oryzae PhoPQ TCS functions in virulence and in the production of AvrXA21 in partnership with RaxRH.