Rhizobium sp. NGR234 contains a plasmid-borne locus that hybridized strongly to region II of R. meliloti. Surprisingly, NGR region II completely inhibited nodulation of Medicago sativa when conjugated into either R. meliloti nodIJ or nodQ1 region II mutants. Further characterization showed that region II of NGR234 contains three putative coding open reading frames (ORFs), which are homologous to, respectively, hypothetical protein A of R. leguminosarum, hypothetical protein C of R. leguminosarum, and ORF2 of Agrobacterium tumefaciens insertion sequence (IS) 66, as well as an ORF of unknown function located downstream of nodQ1 of R. meliloti. A site-directed mutation in the IS66 homologue improved nodulation efficiency on some NGR234 hosts, but the structure and composition of the Nod-factor family produced by the mutant were unchanged. The quantity of Nod factors secreted was reduced by two-thirds, however. Insertions or deletions of the genes encoding either the hypothetical protein C or the IS66 homologue abolished the blocking effect observed in the “complementation” tests with R. meliloti region II mutants.