Penicillin V acylase was produced, both intracellularly and extracellularly, by Fusarium sp. SKF 235 grown in submerged fermentation. When neopeptone was added to the medium, >95% of the penicillin V acylase was extracellular. In the absence of a complex organic nitrogen source, the fungus produced low levels of totally intracellular penicillin V acylase. MgSO4 was essential for synthesis of the enzyme, which was induced by phenoxyacetic acid and penicillin V. The maximum yield of penicillin V acylase was 430 IU/g dry cell wt. The optimum pH value and temperature for the penicillin V acylase were 6.5 and 55°C, respectively.