The MtrAB signal transduction system, which participates in multiple cellular processes related to growth and cell wall homeostasis, is the only two-component system known to be essential in Mycobacterium. In a screen for antibiotic resistance determinants in Mycobacterium smegmatis, we identified a multidrug-sensitive mutant with a transposon insertion in lpqB, the gene located immediately downstream of mtrA-mtrB. The lpqB mutant exhibited increased cell-cell aggregation and severe defects in surface motility and biofilm growth. lpqB cells displayed hyphal growth and polyploidism, reminiscent of the morphology of Streptomyces, a related group of filamentous Actinobacteria. Heterologous expression of M. tuberculosis LpqB restored wild-type characteristics to the lpqB mutant. LpqB interacts with the extracellular domain of MtrB, and influences MtrA phosphorylation and promoter activity of dnaA, an MtrA-regulated gene that affects cell division. Furthermore, in trans expression of the non-phosphorylated, inactive form of MtrA in wild-type M. smegmatis resulted in phenotypes similar to those of lpqB deletion, whereas expression of the constitutively active form of MtrA restored wild-type characteristics to the lpqB mutant. These results support a model in which LpqB, MtrB and MtrA form a three-component system that co-ordinates cytokinetic and cell wall homeostatic processes.