Phenotypic differences among closely related bacteria have been largely ascribed to species-specific genes, such as those residing in pathogenicity islands. However, we now report that the differential regulation of homologous genes is the mechanism responsible for the divergence of the enteric bacteria Salmonella enterica and Escherichia coli in their ability to make LPS modifications mediating resistance to the antibiotic polymyxin B. In S. enterica serovar Typhimurium, the PmrA/PmrB two-component system governing polymyxin B resistance is induced in low Mg(2+) in a process that requires the PmrD protein and by Fe(3+) in a PmrD-independent fashion. We establish that E. coli K-12 induces PmrA-activated gene transcription and polymyxin B resistance in response to Fe(3+), but that it is blind to the low Mg(2+) signal. The highly divergent PmrD protein is responsible for this phenotype as replacement of the E. coli pmrD gene by its Salmonella counterpart resulted in an E. coli strain that transcribed PmrA-activated genes and displayed polymyxin B resistance under the same conditions as Salmonella. Molecular analysis of natural isolates of E. coli and Salmonella revealed that the PmrD proteins are conserved within each genus and that selection might have driven the divergence between the Salmonella and E. coli PmrD proteins. Investigation of PmrD function demonstrated statistically different distributions for the Salmonella and E. coli isolates in PmrD-dependent transcription occurring in low Mg(2+). Our results suggest that the differential regulation of conserved genes may have ecological consequences, determining the range of niches a microorganism can occupy.