beta-Lactam antibiotics such as penicillins and cephalosporins are synthesized by a wide variety of microbes, including procaryotes and eucaryotes. Isopenicillin N synthetase catalyzes a key reaction in the biosynthetic pathway of penicillins and cephalosporins. The genes encoding this protein have previously been cloned from the filamentous fungi Cephalosporium acremonium and Penicillium chrysogenum and characterized. We have extended our analysis to the isopenicillin N synthetase genes from the fungus Aspergillus nidulans and the gram-positive procaryote Streptomyces lipmanii. The isopenicillin N synthetase genes from these organisms have been cloned and sequenced, and the proteins encoded by the open reading frames were expressed in Escherichia coli. Active isopenicillin N synthetase enzyme was recovered from extracts of E. coli cells prepared from cells containing each of the genes in expression vectors. The four isopenicillin N synthetase genes studied are closely related. Pairwise comparison of the DNA sequences showed between 62.5 and 75.7% identity; comparison of the predicted amino acid sequences showed between 53.9 and 80.6% identity. The close homology of the procaryotic and eucaryotic isopenicillin N synthetase genes suggests horizontal transfer of the genes during evolution.