The YycFG two-component system is the only signal transduction system in Bacillus subtilis known to be essential for cell viability. This system is highly conserved in low-G+C gram-positive bacteria, regulating important processes such as cell wall homeostasis, cell membrane integrity, and cell division. Four other genes, yycHIJK, are organized within the same operon with yycF and yycG in B. subtilis. Recently, it was shown that the product of one of these genes, the YycH protein, regulated the activity of this signal transduction system, whereas no function could be assigned to the other genes. Results presented here show that YycI and YycH proteins interact to control the activity of the YycG kinase. Strains carrying individual in-frame deletion of the yycI and yycH coding sequences were constructed and showed identical phenotypes, namely a 10-fold-elevated expression of the YycF-dependent gene yocH, growth defects, as well as a cell wall defect. Cell wall and growth defects were a direct result of overregulation of the YycF regulon, since a strain overexpressing YycF showed phenotypes similar to those of yycH and yycI deletion strains. Both YycI and YycH proteins are localized outside the cytoplasm and attached to the membrane by an N-terminal transmembrane sequence. Bacterial two-hybrid data showed that the YycH, YycI, and the kinase YycG form a ternary complex. The data suggest that YycH and YycI control the activity of YycG in the periplasm and that this control is crucial in regulating important cellular processes.