The WalR-WalK two component signaling system in Bacillus subtilis functions in the homeostatic control of the peptidoglycan (PG) hydrolases LytE and CwlO that are required for cell growth. When the activities of these enzymes are low, WalR activates transcription of and and represses transcription of , a secreted inhibitor of LytE. Conversely, when PG hydrolase activity is too high, WalR-dependent expression of and is reduced and is derepressed. In a screen for additional factors that regulate this signaling pathway, we discovered that overexpression of the membrane-anchored PG deacetylase PdaC increases WalR-dependent gene expression. We show that increased expression of PdaC, but not catalytic mutants, prevents cell wall cleavage by both LytE and CwlO, explaining the WalR activation. Importantly, the gene, like , is repressed by active WalR. We propose that derepression of when PG hydrolase activity is too high results in modification of the membrane-proximal layers of the PG, protecting the wall from excessive cleavage by the membrane-tethered CwlO. Thus, the WalR-WalK system homeostatically controls the levels and activities of both elongation-specific cell wall hydrolases. Bacterial growth and division requires a delicate balance between the synthesis and remodeling of the cell wall exoskeleton. How bacteria regulate the potentially autolytic enzymes that remodel the cell wall peptidoglycan remains incompletely understood. Here, we provide evidence that the broadly conserved WalR-WalK two-component signaling system homeostatically controls both the levels and activities of two cell wall hydrolases that are critical for cell growth.