The role of the putative P450 monooxygenase OxyD and the chlorination time point in the biosynthesis of the glycopeptide antibiotic balhimycin produced by Amycolatopsis balhimycina were analyzed. The oxyD gene is located directly downstream of the bhp (perhydrolase) and bpsD (nonribosomal peptide synthetase D) genes, which are involved in the synthesis of the balhimycin building block beta-hydroxytyrosine (beta-HT). Reverse transcriptase experiments revealed that bhp, bpsD, and oxyD form an operon. oxyD was inactivated by an in-frame deletion, and the resulting mutant was unable to produce an active compound. Balhimycin production could be restored (i) by complementation with an oxyD gene, (ii) in cross-feeding studies using A. balhimycina JR1 (a null mutant with a block in the biosynthesis pathway of the building blocks hydroxy- and dihydroxyphenylglycine) as an excretor of the missing precursor, and (iii) by supplementation of beta-HT in the growth medium. These data demonstrated an essential role of OxyD in the formation pathway of this amino acid. Liquid chromatography-electrospray ionization-mass spectrometry analysis indicated the biosynthesis of completely chlorinated balhimycin by the oxyD mutant when culture filtrates were supplemented with nonchlorinated beta-HT. In contrast, supplementation with 3-chloro-beta-HT did not restore balhimycin production. These results indicated that the chlorination time point was later than the stage of free beta-HT, most likely during heptapeptide synthesis.