<title>Author Summary</title> <p>In both prokaryotes and eukaryotes, extra- and intracellular signals are often processed by biochemical networks in which two enzymes together control the activity of a messenger protein via opposite modification reactions. A well-known example is the chemotaxis network of <italic>Escherichia coli</italic> that controls the swimming behavior of the bacterium in response to chemical stimuli. Recent experiments suggest that the two counteracting enzymes in this network are colocalized at the receptor cluster, while experiments by Vaknin and Berg indicate that the spatial distribution of the enzymes by itself can markedly affect the response of the network. We argue using mathematical modeling that the most widely used model of the chemotaxis network is inconsistent with these experimental observations. We then present an alternative model in which part of one enzyme is colocalized with the other enzyme at the receptor cluster, while the remainder freely diffuses in the cytoplasm; moreover, the fraction at the cluster both binds more strongly to the messenger protein and modifies it faster. This model is consistent with a large number of experimental observations and provides a generic mechanism for amplifying signals.</p>