The Rcs phosphorelay signal transduction system controls genes for capsule production and many other envelope-related functions and is implicated in biofilm formation. We investigated the activation of the Rcs system in a pgsA null mutant of Escherichia coli, which completely lacks the major acidic phospholipids phosphatidylglycerol and cardiolipin. We found that the Rcs activation, and consequent thermosensitivity, were suppressed by overexpression of the lgt gene, encoding diacylglyceryltransferase, which catalyses the modification of prolipoproteins that is the first step in the maturation and localization process of lipoproteins, and is a prerequisite for the later steps. The outer-membrane lipoprotein RcsF is an essential component of Rcs signalling. This lipoprotein was poorly localized to the outer membrane in the pgsA null mutant, probably because of the absence of phosphatidylglycerol, the major donor of diacylglycerol in the Lgt reaction. Even in a pgsA(+) background, the Rcs system was activated when RcsF was mislocalized to the inner membrane by alteration of the residues at positions 2 and 3 of its mature form to inner-membrane retention signals, or when it was mislocalized to the periplasm by fusing the mature form to maltose-binding protein. These results suggest that RcsF functions as a ligand for RcsC in activating Rcs signalling. Mislocalized versions of RcsF still responded to mutations pgsA, mdoH and tolB, further activating the Rcs system, although the rfaP mutation barely caused activation. It seems that RcsF must be localized in the outer membrane to respond effectively to stimuli from outside the cell.