The lac operon in E. coli consists of structural genes that code for enzymes involved in lactose metabolism, regulated by a repressor protein. In the absence of the lactose inducer, the repressor binds to the operator region, preventing transcription of the structural genes. However, in the presence of lactose, the inducer binds to the repressor causing a conformational change that prevents it from binding to the operator, allowing transcription and expression of the structural genes. This creates a negative control system where gene expression is turned on by relieving repression through inducer binding.