Sequence analysis of a 3.4-kb region Streptomyces peucetius daunorubicin (DNR) gene cluster established the presence of the dnrH and dnmT genes. In dnrH mutants, DNR production increased 8.5-fold, compared with that in the wild-type strain, while dnmT mutants accumulated -rhodomycinone (RHO), which normally becomes glycosylated in daunorubicin biosynthesis. Hence, dnmT may be involved in the biosynthesis or attachment of daunosamine to RHO or in the regulation of this process. Since the DnrH protein is similar to known glycosyl transferases, this protein may catalyze the conversion of DNR to its polyglycosylated forms, known as baumycins. Overexpression of dnmT in the wild-type and dnrH mutant strains resulted in a major decrease in RHO accumulation and increase in DNR production.Daunorubicin (DNR) and its C-14 hydroxylated derivative doxorubicin (DXR) are important antitumor anthracycline antibiotics (26) isolated from Streptomyces peucetius ATCC 29050 (2, 5, 7). Studies of DNR and DXR production ( Fig. 1) in this organism have elucidated the organization and regulation of many of the biosynthetic genes (11,12,21,23,29,31), as well as the mechanism of antibiotic resistance (14, 19) and the regulation of DNR and DXR biosynthesis (20,28,34).Here we report the characterization of the dnrH and dnmT genes, which are situated between the dpsH (formerly dnr-ORF7) and dnrE (formerly dnrH) genes in the cluster of DXR biosynthesis genes ( Fig. 2 and 3). Dickens et al. (10) have described homologs of these genes in the Streptomyces sp. strain C5 (dau-ORF2 and -ORF3) but were only able to suggest a possible function for dnrH, as deduced from the DNA sequence. From the results of the expression of the dnrH and dnmT genes in the wild type and a dnrH mutant strain, plus the effects of insertional inactivation of both genes, it seems likely that these two genes govern steps subsequent to the formation of the aglycone ε-rhodomycinone (RHO), a key intermediate of DNR biosynthesis (Fig. 1). Moreover, introduction of dnmT on a high-copy-number plasmid into the dnrH mutant resulted in an 8.5-fold increase in DNR production with a concomitant large decrease in the level of RHO, a useless by product of DNR-producing strains.Sequence analysis of the dnrH and dnmT genes. DNA sequencing of both strands of a 2,162-nucleotide (nt) SphIBamHI fragment by previously reported methods (29) followed by CODONPREFERENCE analysis (9) revealed the C-terminal end of dpsH (the rest of this gene has been sequenced in other work [30]), the complete dnmT gene, and the N-terminal part of dnrH. The remainder of dnrH extends 931 nt into the adjacent 1.3-kb BamHI-AlwNI fragment described by Grimm et al. (13) (Fig. 3). The first ATG codon for dnmT is likely to be located at nt 237 (Fig. 3), even though a probable ribosome binding site is not evident near the 5Ј end of this open reading frame (ORF), and a stop codon (TGA) is located at position 1,752, which suggests that dnmT encodes a 505-amino-acid polypeptide with an M r of 55,433. The dnrH gene has a pr...