The virulence plasmid of the pathogenic actinomycete Rhodococcus equi is essential for proliferation of this pathogen in macrophages and the development of disease. The pathogenicity island of this plasmid encodes a family of virulence-associated proteins (Vap), one of which (VapA) is a virulence factor. This paper describes the vcgAB operon (vapA co-expressed gene), located upstream of the vapA operon. Transcription of the vcgAB operon gave rise to transcripts with a half-life similar to those determined for other virulence plasmid genes (1.8 min). Transcription started at a promoter similar to the vapA promoter, and proceeded through an inefficient terminator into the downstream vcgC gene. In addition, vcgC is also transcribed from a promoter downstream of vcgB. The vcgAB and vapA operons were coordinately regulated by temperature and pH in a synergistic manner. The latter parameter only affected transcription at higher growth temperatures, indicating that temperature is the dominant regulatory signal. Transcription of the vcgAB operon increased 10-fold during the late exponential and stationary growth phases. Transcription was also upregulated during the initial hours following phagocytosis by phagocytic cells. In contrast to vcgA and vcgC, the vcgB gene is conserved in the porcine VapB-encoding plasmid, as well as in pathogenic mycobacteria. The coordinated regulation of vcgB and vapA, transcription of vcgB following phagocytosis and conservation of vcgB in pathogenic mycobacteria indicate a role for vcgB and the vcg genes in the virulence of R. equi.