In Paracoccus denitrificans, three CRP/FNR family regulatory proteins, NarR, NnrR and FnrP, control the switch between aerobic and anaerobic (denitrification) respiration. FnrP is a [4Fe-4S] cluster-containing homologue of the archetypal O2 sensor FNR from E. coli and accordingly regulates genes encoding aerobic and anaerobic respiratory enzymes in response to O2, and also NO, availability. Here we show that FnrP undergoes O2-driven [4Fe-4S] to [2Fe-2S] cluster conversion that involves up to 2 O2 per cluster, with significant oxidation of released cluster sulfide to sulfane observed at higher O2 concentrations. The rate of the cluster reaction was found to be ~sixfold lower than that of E. coli FNR, suggesting that FnrP can remain transcriptionally active under microaerobic conditions. This is consistent with a role for FnrP in activating expression of the high O2 affinity cytochrome c oxidase under microaerobic conditions. Cluster conversion resulted in dissociation of the transcriptionally active FnrP dimer into monomers. Therefore, along with E. coli FNR, FnrP belongs to the subset of FNR proteins in which cluster type is correlated with association state. Interestingly, two key charged residues, Arg140 and Asp154, that have been shown to play key roles in the monomer-dimer equilibrium in E. coli FNR are not conserved in FnrP, indicating that different protomer interactions are important for this equilibrium. Finally, the FnrP [4Fe-4S] cluster is shown to undergo reaction with multiple NO molecules, resulting in iron nitrosyl species and dissociation into monomers.