The MtrA-MtrB two-component regulatory system is highly conserved in Actinobacteria and plays crucial roles in cell cycle progression, cell morphology, antibiotic resistance, and osmoprotection. Previously, we revealed that the MtrA protein of Saccharopolyspora erythraea E3 strain (a high erythromycin-producing strain) had a two amino acid (H197 and V198) deletion in the DNA recognition helices of the C-terminal domain compared to the wild type S. erythraea strain NRRL2338. Here, we identified mepA (encoding a membrane protein related to metalloendopeptidases) as an MtrA target gene, and found that deleting the two amino acids in MtrA (MtrA(del)) resulted in the loss of its DNA-binding activity for the mepA gene. The mutant MtrA(del) lost its regulatory activity and affected various physiological functions consistent with mtrA deletion, including increased erythromycin biosynthesis, enhanced antibiotic resistance, deregulated osmoprotection, and improved transport of substances. The introduction of the wild type mtrA gene into the S. erythraea E3 strain with the mtrA(del) gene decreased the erythromycin yield by approximately 50%, confirming that MtrA repressed erythromycin production. These findings demonstrate that MtrA is an important pleiotropic regulator of erythromycin biosynthesis, antibiotic resistance, osmoprotection, and substance transport in S. erythraea and provide new insights for improving erythromycin production. Future studies linking the molecular effects of MtrA to these phenotypes will improve our understanding of the MtrA-MtrB two-component regulatory system in Actinobacteria.