An in-phase gene fusion consisting of the 5'-terminal 1,314 base pairs (bp) of the structural gene for beta-galactosidase (lacZ) and the 3'-terminal 1,644 bp of the structural gene coding for penicillin-binding protein 3 (pbpB) of Escherichia coli was constructed and cloned in the plasmid pDIAM64. The product of the fusion gene was a remarkably stable protein with an apparent molecular weight of 110,000 (p110) that retained the ability to covalently interact with beta-lactam antibiotics. The fusion protein was found associated with the membrane at low levels of induction, but it accumulated in the cytoplasm of cells induced for a long time as inclusion bodies of high density. Inclusion bodies were localized at defined positions corresponding to septal sites in all of the pDIAM64-containing strains tested except PAT84 and GD113 (which carry the ftsZ84 mutant allele). These findings indicate a possible role of the FtsZ protein in the integration of Pbp3 into the membrane and in septum localization during the cell division cycle.