The Escherichia coli operon dosCP, also called yddV-yddU, co-expresses two heme proteins, DosC and DosP, both of which are direct oxygen sensors but paradoxically have opposite effects on the levels of the second messenger c-di-GMP. DosC is a diguanylate cyclase that synthesizes c-di-GMP from GTP, whereas DosP is a phosphodiesterase that linearizes c-di-GMP to pGpG. Both proteins are associated with the large degradosome enzyme complex that regulates many bacterial genes post-transcriptionally by processing or degrading the corresponding RNAs. Moreover, the c-di-GMP directly binds to PNPase, a key degradosome enzyme, and enhances its activity. This review combines biochemical, biophysical, and genetic findings on DosC and DosP, a task that has not been undertaken until now, partly because of the varied nomenclature. The DosC and DosP system is examined in the context of the current knowledge of degradosomes and considered as a possible prototype for the compartmentalization of sensing by E. coli.