Clavulanic acid, a β-lactamase inhibitor, is used together with β-lactam antibiotics to create drug mixtures possessing potent antimicrobial activity. In view of the clinical and industrial importance of clavulanic acid, identification of the clavulanic acid biosynthetic pathway and the associated gene cluster(s) in the main producer species, Streptomyces clavuligerus, has been an intriguing research question. Clavulanic acid biosynthesis was revealed to involve an interesting mechanism common to all of the clavam metabolites produced by the organism, but different from that of other β-lactam compounds. Gene clusters involved in clavulanic acid biosynthesis in S. clavuligerus occupy large regions of nucleotide sequence in three loci of its genome. In this review, clavulanic acid biosynthesis and the associated gene clusters are discussed, and clavulanic acid improvement through genetic manipulation is explained.