A D-erythorbic acid-forming soluble flavoprotein, gluconolactone oxidase (GLO), was purified from Penicillium cyaneo-fulvum strain ATCC 10431 and partially sequenced. Peptide sequences were used to isolate a cDNA clone encoding the enzyme. The cloned gene (accession no. AY576053) exhibits high levels of similarity with the genes encoding other known eukaryotic lactone oxidases and also with the genes encoding some putative prokaryotic lactone oxidases. Analysis of the coding sequence of the GLO gene indicated the presence of a typical secretion signal sequence at the N terminus of GLO. No other targeting or anchoring signals were found, suggesting that GLO is the first known lactone oxidase that is secreted rather than targeted to the membranes of the endoplasmic reticulum or mitochondria. Experimental evidence, including the N-terminal sequence of mature GLO and data on glycosylation and localization of the enzyme in native and recombinant hosts, supports this analysis. The GLO gene was expressed in Pichia pastoris, and recombinant GLO was produced by using the strong methanol-induced AOX1 promoter. In order to evaluate the suitability of purified GLO for production of D-erythorbic acid, we immobilized it on N-hydroxysuccinimide-activated Sepharose and found that the immobilized GLO retained full activity during immobilization but was rather unstable under reaction conditions. Our results show that both soluble and immobilized forms of GLO can, in principle, be used for production of D-erythorbic acid from D-glucono-␦-lactone or (in combination with glucose oxidase and catalase) from glucose. We also demonstrated the feasibility of glucose-D-erythorbic acid fermentation with recombinant strains coexpressing GLO and glucose oxidase genes, and we analyzed problems associated with construction of efficient D-erythorbic acid-producing hosts.D-Erythorbic acid (D-EA) (D-araboascorbic acid, isovitamin C) is a C-5 epimer of L-ascorbic acid. It has chemical properties very similar to those of ascorbic acid but very low vitamin C activity. D-EA and erythorbates have been used as food antioxidants for many years, particularly in processed meat and soft drinks. Currently, D-EA is manufactured by a two-step process; glucose is first converted into D-2-ketogluconic acid by fermentation, and this is followed by chemical lactonization similar to the lactonization of L-2-ketogulonic acid in the Reichstein process. In the early 1960s, direct conversion of glucose into D-EA by Penicillium fungi was discovered (48). This discovery was followed by an extensive mutagenesis and selection program that resulted in strains capable of converting glucose into D-EA with a yield of approximately 40% over a week-long fermentation (44, 56). These process parameters are still not sufficient to make the direct fermentation of glucose into D-EA economically feasible. In the last decade, much research effort has been spent on development of biotechnology-based processes for L-ascorbic acid manufacture (12,40). Most of the studies aimed at a two-s...