Sugar transport by some permeases in Escherichia coli is allosterically regulated by the phosphorylation state of the intracellular regulatory protein, enzyme IIAglc of the phosphoenolpyruvate:sugar phosphotransferase system. A sensitive radiochemical assay for the interaction of enzyme IIAglc with membrane-associated lactose permease was used to characterize the binding reaction. The binding is stimulated by transportable substrates such as lactose, melibiose, and raffinose, but not by sugars that are not transported (maltose and sucrose). Treatment of lactose permease with N-ethylmaleimide, which blocks ligand binding and transport by alkylating Cys-148, also blocks enzyme IIAglc binding. Preincubation with the substrate analog beta-D-galactopyranosyl 1-thio-beta-D-galactopyranoside protects both lactose transport and enzyme IIAglc binding against inhibition by N-ethylmaleimide. A collection of lactose permease replacement mutants at Cys-148 showed, with the exception of C148V, a good correlation of relative transport activity and enzyme IIAglc binding. The nature of the interaction of enzyme IIAglc with the cytoplasmic face of lactose permease was explored. The N- and C-termini, as well as five hydrophilic loops in the permease, are exposed on the cytoplasmic surface of the membrane and it has been proposed that the central cytoplasmic loop of lactose permease is the major determinant for interaction with enzyme IIAglc. Lactose permease mutants with polyhistidine insertions in cytoplasmic loops IV/V and VI/VII and periplasmic loop VII/VIII retain transport activity and therefore substrate binding, but do not bind enzyme IIAglc, indicating that these regions of lactose permease may be involved in recognition of enzyme IIAglc. Taken together, these results suggest that interaction of lactose permease with substrate promotes a conformational change that brings several cytoplasmic loops into an arrangement optimal for interaction with the regulatory protein, enzyme IIAglc. A topological map of the proposed interaction is presented.