Daunorubicin forms specific complex with an extracellular protease in the Streptomyces peucetius culture. The drug-protein complex co-migrates in non-denaturing PAGE as a red band. De novo peptide sequencing by nano-LC-ESI-MS/MS and MASCOT analysis identified the daunorubicin binding protein as serine protease precursor. The same protease precursor was purified sans the daunorubicin, from the mutant named ΔDPSAmut, which is deficient in daunorubicin production. Daunorubicin was added to ΔDPSAmut culture and the protease readily formed the daunorubicin-protease complex. Ability of serine protease precursor to form a selective complex with daunorubicin was confirmed by this study. Selective binding of protease to daunorubicin was seen as self-resistance determinant for the organism to survive toxic levels of the drug outside the cell. Daunorubicin-protease complex placed on S. peucetius lawn did not produce clearing zone around it, whereas daunorubicin purified from the complex did produce the clearing zone. Thereby it is concluded that the protease sequesters daunorubicin to prevent its entry into cells. Sequestration of daunorubicin by extracellular protease helps the organism to maintain a steady state sub-inhibitory level of drug around the cells. A new self-resistance determinant is reported here.