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Lactococcus lactis is an AT-rich gram positive bacterium phylogenetically close to the genus Streptococcus. Various strains of L. lactis are used in dairy industry as starters for cheese making. L. lactis is also one of the well characterized laboratory microorganisms, widely used for studies on physiology of lactic acid bacteria. We describe here a low redundancy sequence of the genome of the strain L. lactis IL1403. The strategy which we followed to determine the sequence consists of two main steps. First, a limited number of plasmids and lambda-phages that carry random segments of the genome were sequenced. Second, sequences of the inserts were used for production of novel sequencing templates by applying Multiplex Long Accurate PCR protocols. Using of these PCR products allowed to determine the sequence of the entire 2.35 Mb genome with a very low redundancy, close to 2. The error rate of the sequence is estimated to be below 1%. The correctness of the sequence assembly was confirmed by PCR amplification of the entire L. lactis IL1403 genome, using a set of 266 oligonucleotides. Anotation of the sequence was undertaken by using automatic gene prediction computer tools. This allowed to identify 1495 protein-encoding genes, to locate them on the genome map and to classify their functions on the basis of homology to known proteins. The function of about 700 genes expected to encode proteins that lack homologs in data bases cannot be reliably predicted in this way. The approach which we used eliminates high redundancy sequencing and mapping efforts, needed to obtain detailed and comprehensive genetic and physical maps of a bacterium. Availability of detailed genetic and physical maps of the L. lactis IL1403 genome provides many entries to study metabolism and physiology of bacteria from this group. The presence of 42 copies of five different IS elements in the IL1403 genome confirms the importance of these elements for genetic exchange in Lactococci. These include two previously unknown elements, present at seven and fifteen copies and designated IS1077 and IS983, respectively. Five potential or rudimentary prophages were identified in the genome by detecting clusters of phage-related genes. The metabolic and regulatory potential of L. lactis was evaluated by inspecting gene sets classified into different functional categories. L. lactis has the genetic potential to synthesise 20 standard amino acids, purine and pyrimidine nucleotides and at least four cofactors. Some of these metabolites, which are usually present in chemically defined media, can probably be omitted. About twenty compounds can be used by L. lactis as a sole carbon source. Some 83 regulators were revealed, indicating a regulatory potential close to that of Haemophilus influenzae, a bacterium with a similar genome size. Unexpectedly, L. lactis has a complete set of late competence genes, which may have concerted transcriptional regulation and unleadered polycistronic mRNAs. These findings open new possibilities for developing genetic tools, useful for studies of gene regulation in AT-rich gram positive bacteria and for engineering of new strains for the diary industry.