Site-directed mutagenesis and gene replacement were used to inactivate two ketoreductase (KR) domains within the amphotericin polyketide synthase in Streptomyces nodosus. The KR12 domain was inactivated in the DeltaamphNM strain, which produces 16-descarboxyl-16-methyl-amphotericins. The resulting mutant produced low levels of the expected 15-deoxy-15-oxo analogs that retained antifungal activity. These compounds can be useful for further chemical modification. Inactivation of the KR16 domain in the wild-type strain led to production of 7-oxo-amphotericin A and 7-oxo-amphotericin B in good yield. 7-oxo-amphotericin B was isolated, purified, and characterized as the N-acetyl methyl ester derivative. 7-oxo-amphotericin B had good antifungal activity and was less hemolytic than amphotericin B. These results indicate that modification at the C-7 position can improve the therapeutic index of amphotericin B.