The purpose of the present study was to investigate the production of cephalosporin C in solid state fermentation with rice as a basal substrate. Among the various grains as basal substrates tested, rice was the best one and the worst one was soyflour . Among the varieties of rice examined, Tsailai rice was the best. The proposed best formula for the fermentation medium on the basis of 10 g rice grain consists the following % of the ingredients, 0.65, peptone, 0.65, ammonium sulfate, 0.26, inositol, 1.3 (v/w), trace element solution, 0.65 calcium carbonate, 0.65 calcium sulfate, 0.065, potasium sulfate, 1.3, sucrose, 0.13, DL-methionine and 2.6, methyl oleate. Of the strains of C. acremonium used, strain M8650 -R-3 was superior to strain ATCC 14553. The optimum inoculum density was 2.8 X 10(8) spores of C. acremonium M8650 -R-3 per g substrate. The initial moisture content of the medium at 49-51%, the water activity at 0.985, and the fermentation temperature at 25 degrees C were found as the optimun . After 7 days of fermentation, the maximum yield of cephalosporin C was 6420 micrograms per g substrate and the total cephalosporin C equivalent potency was 11,000 micrograms per g substrate.