Cephalexin synthesizing enzyme (CSE) of Gluconobacter oxydans ATCC 9324 was purified up to about 940-fold at a yield of 12%. CSE biosynthesis in G. oxydans was found inducible in the presence of D-phenylglycine but not its substrate phenylglycine methyl ester. The purified enzyme was shown homogeneous on SDS-PAGE and exhibited a specific activity of 440 U per mg protein. The apparent molecular mass of the native enzyme was estimated to be 70 kDa over a Superdex 200 gel filtration column and 68 kDa on SDS-PAGE, indicating that the native enzyme is a monomer. Its isoelectric focusing point is 7.1, indicating a neutral character. The enzyme had maximal activity around pH 6.0 to 6.5, and this activity was thermally stable up to 40 degrees C. Synthesis of cephalexin from D-phenylglycine methyl ester and 7-amino-3-deacetoxycephalosporanic acid (7-ADCA) by the purified CSE was demonstrated. Its L-enantiomer was not accepted by CSE. Apart from cephalexin, ampicillin was also synthesized by the purified CSE from its acyl precursors and 6-aminopenicillanic acid (6-APA). Substrate specificity studies indicated that the enzyme required a free alpha amino group and an activated carboxyl group as a methyl ester of D-form phenylglycine. Interestingly, the purified enzyme did not catalyze hydrolysis of its products, e.g., cephalexin, cephradine, and ampicillin, in contrast to enzymes from other strains of Pseudomonadaceae.