Transcription regulation in a temporal and conditional manner underpins the lifecycle of enterobacterial pathogens. Upon exposure to a wide array of environmental cues, these pathogens modulate their gene expression via the RNA polymerase and associated sigma factors. Different sigma factors, either involved in general ‘house-keeping’ or specific responses, guide the RNA polymerase to their cognate promoter DNAs. The major alternative sigma54 factor when activated helps pathogens manage stresses and proliferate in their ecological niches. In this chapter, we review the function and regulation of the sigma54-dependent Phage shock protein (Psp) system—a major stress response when Gram-negative pathogens encounter damages to their inner membranes. We discuss the recent development on mechanisms of gene regulation, signal transduction and stress mitigation in light of different biophysical and biochemical approaches.