The epimerization step that converts isopenicillin N into penicillin N during cephalosporin biosynthesis has remained uncharacterized despite its industrial relevance. A transcriptional analysis of a 9-kb region located downstream of the pcbC gene revealed the presence of two transcripts that correspond to the genes named cefD1 and cefD2 encoding proteins with high similarity to long chain acyl-CoA synthetases and acylCoA racemases from Mus musculus, Homo sapiens, and Rattus norvegicus. Both genes are expressed in opposite orientations from a bidirectional promoter region. Targeted inactivation of cefD1 and cefD2 was achieved by the two-marker gene replacement procedure. Disrupted strains lacked isopenicillin N epimerase activity, were blocked in cephalosporin C production, and accumulated isopenicillin N. Complementation in trans of the disrupted nonproducer mutant with both genes restored epimerase activity and cephalosporin biosynthesis. However, when cefD1 or cefD2 were introduced separately into the double-disrupted mutant, no epimerase activity was detected, indicating that the concerted action of both proteins encoded by cefD1 and cefD2 is required for epimerization of isopenicillin N into penicillin N. This epimerization system occurs in eukaryotic cells and is entirely different from the known epimerization systems involved in the biosynthesis of bacterial -lactam antibiotics.The molecular genetics of cephalosporin biosynthesis is an excellent model for secondary metabolism, since considerable information on the enzymology (reviewed in Refs. 1 and 2), molecular genetics, and gene expression mechanisms (3-5) has accumulated in the last few years. The biosynthesis of cephalosporins by Acremonium chrysogenum and cephamycins by Amycolatopsis (Nocardia) lactamdurans and Streptomyces clavuligerus (reviewed in Refs. 6 and 7) begins with the formation1 by the ACV synthetase (8), followed by cyclicization of ACV to isopenicillin N (IPN). IPN is later converted into penicillin N by an epimerase activity that has remained uncharacterized so far in A. chrysogenum. After the epimerization step, penicillin N is transformed by a deacetoxycephalosporin C synthase (expandase) into deacetoxycephalosporin C, and finally, deacetoxycephalosporin C is converted into deacetylcephalosporin C (DAC) and cephalosporin C by DAC synthase (hydroxylase) and DAC acetyltransferase, respectively (Fig. 1).The genes pcbAB (9) and pcbC (10) encoding ACV synthetase and IPN synthase are linked together in chromosome VII in the so-called "early cephalosporin gene cluster" (11). The genes cefEF, encoding the bifunctional expandase-hydroxylase (12), and cefG, encoding the DAC acetyltransferase (13,14), are linked together in the so-called "late cephalosporin cluster" in chromosome I (11).The isopenicillin N epimerization step still remains unclear. Demain and co-workers (15, 16) reported that isopenicillin N was converted into penicillin N by extracts of A. chrysogenum, although the epimerizing enzyme was extremely labile (17, 18), preventing ...