Bacterial cell wall peptidoglycan is a dynamic structure requiring hydrolysis to allow cell wall growth and division. Staphylococcus aureus has many known and putative peptidoglycan hydrolases, including two likely lytic transglycosylases. These two proteins, IsaA and SceD, were both found to have autolytic activity. Regulatory studies showed that the isaA and sceD genes are partially mutually compensatory and that the production of SceD is upregulated in an isaA mutant. The expression of sceD is also greatly upregulated by the presence of NaCl. Several regulators of isaA and sceD expression were identified. Inactivation of sceD resulted in impaired cell separation, as shown by light microscopy, and “clumping” of bacterial cultures. An isaA sceD mutant is attenuated for virulence, while SceD is essential for nasal colonization in cotton rats, thus demonstrating the importance of cell wall dynamics in host-pathogen interactions.