Pigment mutant strain FdR1 of the filamentous cyanobacterium Fremyella diplosiphon is characterized by constitutive synthesis of the phycobiliprotein phycoerythrin due to insertional inactivation of the rcaC regulatory gene by endogenous transposon Tn5469. Whereas the parental strain Fd33 harbors five genomic copies of Tn5469, cells of strain FdR1 harbor six genomic copies of the element; the sixth copy in FdR1 is localized to the rcaC gene. Electroporation of FdR1 cells yielded secondary pigment mutant strains FdR1E1 and FdR1E4, which identically exhibited the FdR1 phenotype with significantly reduced levels of phycoerythrin. In both FdR1E1 and FdR1E4, a seventh genomic copy of Tn5469 was localized to the cpeY gene of the sequenced but phenotypically uncharacterized cpeYZ gene set. This gene set is located downstream of the cpeBA operon which encodes the ␣ and  subunits of phycoerythrin. Complementation experiments correlated cpeYZ activity to the phenotype of strains FdR1E1 and FdR1E4. The predicted CpeY and CpeZ proteins share significant sequence identity with the products of homologous cpeY and cpeZ genes reported for Pseudanabaena sp. strain PCC 7409 and Synechococcus sp. strain WH 8020, both of which synthesize phycoerythrin. The CpeY and CpeZ proteins belong to a family of structurally related cyanobacterial proteins that includes the subunits of the CpcE/CpcF phycocyanin ␣-subunit lyase of Synechococcus sp. strain PCC 7002 and the subunits of the PecE/PecF phycoerythrocyanin ␣-subunit lyase of Anabaena sp. strain PCC 7120. Phycobilisomes isolated from mutant strains FdR1E1 and FdR1E4 contained equal amounts of chromophorylated ␣ and  subunits of phycoerythrin at 46% of the levels of the parental strain FdR1. These results suggest that the cpeYZ gene products function in phycoerythrin synthesis, possibly as a lyase involved in the attachment of phycoerythrobilin to the ␣ or  subunit.Cyanobacteria harvest light energy for photosynthesis with macromolecular antenna complexes, termed phycobilisomes, which are peripherally attached to the photosynthetic membrane (for reviews, see references 18 and 28). These complexes absorb visible light in the range of 500 to 680 nm and efficiently transfer the captured light energy to chlorophylls of the photosynthetic apparatus. Phycobilisomes consist of two structural domains: a core which contacts the photosynthetic membrane and rods, generally six in number, that radiate from the core. Both domains are composed of phycobiliproteins and nonchromophorylated linker polypeptides. The major phycobiliproteins in a number of cyanobacteria are the blue-green-pigmented allophycocyanin (AP) (absorbance maximum [A max ] of ϳ650 nm), the blue-pigmented phycocyanin (PC) (A max of ϳ620 nm), and the red-pigmented phycoerythrin (PE) (A max of ϳ560 nm), each consisting of an ␣ and a  subunit. AP is localized to the phycobilisome core in the form of stacked trimeric disks, whereas PC and PE are localized to the rods in the form of stacked hexameric disks. The linker polypeptides di...