Lactococcus lactis strain NIZO B40 produces an extracellular phosphopolysaccharide containing galactose, glucose, and rhamnose. A 40 kb plasmid encoding exopolysaccharide production was isolated through conjugal transfer of total plasmid DNA from strain NIZO B40 to the plasmid-free L. lactis model strain MG1614 and subsequent plasmid curing. A 12 kb region containing 14 genes with the order epsRXABCDEFGHIJKL was identified downstream of an iso-IS982 element. The predicted gene products of epsABCDEFGHIJK show sequence homologies with gene products involved in exopolysaccharide, capsular polysaccharide, lipopolysaccharide, or teichoic acid biosynthesis of other bacteria. Transcriptional analysis of the eps gene cluster revealed that the gene cluster is transcribed as a single 12 kb mRNA. The transcription start site of the promoter was mapped upstream of the first gene epsR. The involvement of epsD in exopolysaccharide (EPS) biosynthesis was demonstrated through a single gene disruption rendering an exopolysaccharide-deficient phenotype. Heterologous expression of epsD in Escherichia coli showed that its gene product is a glucosyltransferase linking the first sugar of the repeating unit to the lipid carrier.