In many gram positive bacteria, horizontal transfer and virulence are regulated by peptide-mediated cell-cell signaling. The heptapeptide cCF10 (C) activates conjugative transfer of the Enterococcus faecalis plasmid pCF10, whereas the iCF10 (I) peptide inhibits transfer. Both peptides bind to the same domain of the master transcription regulator PrgX, a repressor of transcription of the prgQ operon encoding conjugation genes. We show that repression of prgQ by PrgX tetramers requires formation of a pCF10 DNA loop where each of two PrgX DNA-binding sites is occupied by a dimer. I binding to PrgX enhances prgQ repression, while C binding has the opposite effect. Previous models suggested that differential effects of these two peptides on the PrgX oligomerization state accounted for their distinct functions. Our new results demonstrate that both peptides have similar, high-binding affinity for PrgX, and that both peptides actually promote formation of PrgX tetramers with higher DNA-binding affinity than Apo-PrgX. We propose that differences in repression ability of PrgX/peptide complexes result from subtle differences in the structures of DNA-bound PrgX/peptide complexes. Changes in the induction state of a donor cell likely results from replacement of one type of DNA-bound peptide/PrgX tetramer with the other.