The Escherichia coli sigma (E) regulon has evolved to sense the presence of misfolded proteins in the bacterial envelope. Expression of periplasmic chaperones and folding catalysts is under the control of sigma (E) RNA polymerase. The N-terminal domain of RseA sequesters sigma (E) in the cytoplasmic membrane, preventing its association with core RNA polymerase, The C-terminal domain of RseA interacts with RseB, a periplasmic protein. The relative concentration of sigma (E):RseA:RseB is 2:5:1 and this ratio remains unaltered upon heat shock induction of the sigma (E) regulon. Purification from crude cellular extracts yields cytoplasmic, soluble sigma (E) RNA polymerase as web as membrane sequestered sigma (E) RseA and sigma (E).RseA.RseB. RseB binding to the C-terminal domain of RseA increases the affinity of RseA for sigma (E) by 2- to 3-fold (K-d, 50-100 nM). RseB binds also to the misfolded aggregates of MalE31, a variant of maltose binding protein that forms inclusion bodies in the periplasm. We discuss a model whereby the RseB-RseA interaction represents a measure for misfolded polypeptides in the bacterial envelope, modulating the assembly of sigma (E) RNA polymerase and the cellular heat shock response.