The expression of the pap pilus operon of Escherichia coli is under a phase-variation control mechanism in which cells undergo a reversible transition between transcriptionally active (phase ON) and inactive (phase OFF) states. In this study, we explore the roles of leucine-responsive regulatory protein (Lrp) and the histone-like protein H-NS in the regulation of pap phase variation. Our data indicate that the phase OFF state results from repression of the intrinsically active papBA promoter by Lrp and H-NS, each of which can act independently as transcriptional repressors. Lrp requires pap DNA sequences upstream of the papBA promoter for its repressor activity whereas H-NS does not. In contrast, in the ON state, Lrp, in conjunction with PapI, activates pap transcription. This activation is not merely a result of alleviating the H-NS mediated repression, but induces a level of transcription that is eightfold higher than the basal level of transcription from the papBA promoter measured in the absence of both H-NS and Lrp. Analysis of Lrp activation mutants indicates that binding of Lrp to pap DNA sequences is not sufficient for transcription activation, consistent with a model in which an additional domain of Lrp interacts with the transcriptional apparatus. Together, our results show that Lrp functions as a transcriptional activator in phase-ON cells and as a repressor of basal transcription in phase-OFF cells. Because pap phase variation occurs in the absence of H-NS, it is not clear what role this regulatory protein plays in pap gene regulation.