The cyclic -(1,2)-glucans of Rhizobium meliloti and Agrobacterium tumefaciens play an important role during hypoosmotic adaptation, and the synthesis of these compounds is osmoregulated. Glucosyltransferase, the enzyme responsible for cyclic -(1,2)-glucan biosynthesis, is present constitutively, suggesting that osmotic regulation of the biosynthesis of these glucans occurs through modulation of enzyme activity. In this study, we examined regulation of cyclic glucan biosynthesis in vitro with membrane preparations from R. meliloti. The results show that ionic solutes inhibit glucan synthesis, even when they are present at low concentrations (e.g., 10 mM). In contrast, neutral solutes (glucose, sucrose, and the compatible solutes glycine betaine and trehalose) were found to stimulate glucan synthesis in vitro when they were present at high concentrations (e.g., 1 M). Furthermore, high concentrations of these neutral solutes were shown to compensate for the inhibition of glucosyltransferase activity by ionic solutes. Consistent with their ionic character, the compatible solute potassium glutamate and the osmoprotectant choline chloride inhibited glucosyltransferase activity in vitro. The results suggest that intracellular ion concentrations, intracellular osmolarity, and intracellular concentrations of nonionic compatible solutes all act as important determinants of glucosyltransferase activity in vivo. Additional experiments were performed with an ndvA mutant defective for transport of cyclic glucans and an ndvB mutant that produces a C-terminal truncated glucosyltransferase. Cyclic -(1,2)-glucan biosynthesis, although reduced, was found to be osmoregulated in both mutants. These results reveal that NdvA and the C terminus of NdvB are not required for osmotic regulation of cyclic -(1,2)-glucan biosynthesis.