Abstract The allosteric mechanism by which the gene expression regulatory protein AraC regulates its DNA‐binding activity is shown to be portable by grafting it to β‐galactosidase, generating an arabinose‐regulated β‐galactosidase. A portion of the α‐peptide sequence that complements the activity of α‐acceptor β‐galactosidase was inserted into a nonessential region of the regulatory peptidyl arm of AraC protein. Arabinose, which regulates the position of the arm in AraC protein now regulates the availability of the α‐peptide to α‐acceptor β‐galactosidase, thereby modulating its activity in response to arabinose. Proteins 2004. © 2004 Wiley‐Liss, Inc.