Biosynthesis of cephalosporin antibiotics involves an expansion of the five-membered thiazolidine ring of penicillin N to the six-membered dihydrothiazine ring of deacetoxycephalosporin C by a deacetoxycephalosporin C synthetase (DAOCS) enzyme activity. Hydroxylation of deacetoxycephalosporin C to form deacetylcephalosporin C by a deacetylcephalosporin C synthetase (DACS) activity is the next step in biosynthesis of cephalosporins. In Cephalosporium acremonium, both of these catalytic activities are exhibited by a bifunctional enzyme, DAOCS-DACS, encoded by a single gene, cefEF. In Streptomyces clavuligerus, separable enzymes, DAOCS (expandase) and DACS (hydroxylase), catalyze these respective reactions. We have cloned, sequenced, and expressed in E. coli an S. clavuligerus gene, designated cefE, which encodes DAOCS but not DACS. The deduced amino acid sequence of DAOCS from S. clavuligerus (calculated Mr of 34,519) shows marked similarity (approximately 57%) to the deduced sequence of DAOCS-DACS from C. acremonium; however, the latter sequence is longer by 21 amino acid residues.