A previously developed dynamic model of the Escherichia coli Pho regulon was extended to investigate the effect of polyphosphate synthesis and degradation on this control system. Differential equations for ATP and polyphosphate were formulated, and the model was applied to the growth of cells containing the ppk and ppx genes under control of separate, inducible promoters. In agreement with recent experimental observations, the degradation of polyphosphate by PPX during a period of phosphate limitation could repress the phosphate-starvation response. This is attributed to the release of phosphate from the cell into the periplasm, where it can be detected by the external phosphate sensor. A segregated model was then developed to account for differences in KI, the dissociation constant for the repression complex, among cells of the population. Since KI is the key parameter in determining whether the Pho response is induced or repressed at a particular surface phosphate concentration, this permitted the induction of some cells while others remained repressed. The induction profiles resulting from the population-averaged values more closely matched experimental results than did those with the nonsegregated model.