The cydAB operon of Escherichia coli encodes the cytochrome d oxidase complex, one of two aerobic terminal oxidases that catalyses the oxidation of ubiquinol‐8 and the reduction of oxygen to water. This enzyme has a higher affinity for oxygen than the cytochrome o oxidase complex and accumulates as oxygen becomes limiting. Expression of the cydAB operon is microaerobically controlled by the ArcA/ArcB two‐component regulatory system and by Fnr. To understand how ArcA and Fnr contribute to this control, a set of cyd–lacZ reporter fusions were constructed and analysed in vivo. Two cydAB promoters, designated P1 and P2, were identified by primer extension analysis and are located 288 and 173 bp upstream of the start of cydA translation respectively. Transcription from promoter P1 was shown to be regulated by both Fnr and ArcA in response to anaerobiosis. DNaseI footprint experiments revealed the locations of two Fnr binding sites at the P1 promoter: one is centred at the start of cyd transcription, while the other is positioned 53.5 bp upstream. A single ArcA‐phosphate binding site of 49 bp, centred 93 bp upstream of promoter P1, was identified to be sufficient for the activation of cydAB expression. Based on the results of the in vitro and in vivo studies, a working model for ArcA activation and Fnr repression of cydAB transcription is proposed.