The ferric uptake regulator (Fur) is a global transcription factor that controls intracellular iron homeostasis in bacteria. It had been assumed that Fur binds its co-repressor ferric iron and becomes an active repressor to regulate the expression of genes in bacteria. However, the proposed iron-bound Fur had never been identified in E. coli or any other bacteria. We have found that Fur reversibly binds a [2Fe-2S] cluster in response to elevation of intracellular free iron content in E. coli. The whole-cell Mössbauer spectroscopy measurements further reveal that the [2Fe-2S] cluster in Fur is in an oxidized state in E. coli cells, and reduction of the cluster quickly releases iron and sulfide. The gel filtration column analysis shows that the [2Fe-2S] cluster-bound E. coli Fur is a homodimer which is active to bind the DNA sequence known as Fur-box. Depletion of intracellular free iron content or deletion of the iron-sulfur cluster assembly protein IscU in E. coli cells results in an apo-form Fur that is a monomer and loses the binding activity for Fur-box. Mutation of the conserved Cys-93 or Cys-96 to Ala also produces an apo-form Fur that only exists as a monomer in E. coli cells. While the Fur dimer dissociates to monomers upon removal of the [2Fe-2S] cluster, reassembly of the [2Fe-2S] cluster in apo-form Fur leads to dimerization and restores the Fur-box binding activity in vitro, suggesting that the binding of the [2Fe-2S] cluster drives dimerization of Fur and turns on its regulatory activity as a repressor.