The biosynthetic pathway of pamamycin (1), a nitrogen-containing polyketide, was investigated using blocked mutants of Streptomyces alboniger. Hydroxy acids K (3), L (4) and S (5) were found in cultured materials of blocked mutants and the wild type strain, but no PM-ketone (2) was detected. Hydroxy acids 3, 4, 5 and de-N-methylhydroxy acid L (7) were converted into 1, but 2 nor de-N-methylpamamycin (6) were not. We also confirmed that 3 and 7 were converted into 4. These results showed that an amino group was introduced into the carbonyl group of 3 by transamination, and subsequent N-methylation led to 4 in the pamamycin biosynthetic pathway. Quantitative analyses of hydroxy acid intermediates 3, 4, and 5, and pamamycin (1) suggested that transamination was the rate-determining step in pamamycin biosynthesis.