The heat shock response in Escherichia coli is governed by the concentration of the highly unstable sigma factor sigma 32. The essential protein HflB (FtsH), known to control proteolysis of the phage lambda cII protein, also governs sigma 32 degradation: an HflB-depleted strain accumulated sigma 32 and induced the heat shock response, and the half-life of sigma 32 increased by a factor up to 12 in mutants with reduced HflB function and decreased by a factor of 1.8 in a strain overexpressing HflB. The hflB gene is in the ftsJ-hflB operon, one promoter of which is positively regulated by heat shock and sigma 32. The lambda cIII protein, which stabilizes sigma 32 and lambda cII, appears to inhibit the HflB-governed protease. The E. coli HflB protein controls the stability of two master regulators, lambda cII and sigma 32, responsible for the lysis-lysogeny decision of phage lambda and the heat shock response of the host.