The bla gene of the cephamycin cluster of Nocardia lactamdurans has been subcloned in the shuttle plasmids pULVK2 and pULVK2A and amplified in N. lactamdurans LC411. The transformants showed two- to threefold higher beta-lactamase activity. Formation of beta-lactamase preceded the onset of cephamycin biosynthesis. The beta-lactamase of N. lactamdurans inactivated penicillins and, to a lesser extent, cephalosporin C but did not hydrolyse cephamycin C. This beta-lactamase was highly sensitive to clavulanic acid (50% inhibition was observed at 0.48 mu g/ml clavulanic acid). The N. lactamdurans bla gene was disrupted in vivo by insertion of the kanamycin-resistance gene. Three bin-disrupted mutants, BD4, BD8 and BD12, were selected that lacked beta-lactamase activity. Overexpression of the bla gene resulted in N. lactamdurans transformants that were resistant to penicillin whereas mutants in which the bin gene was disrupted were supersensitive to this antibiotic. The three N. lactamdurans mutants with the bla gene disrupted showed a significant increase of cephamycin biosynthesis in solid medium, whereas transformants with the amplified bla gene produced reduced levels of cephamycin. The cephamycin-overproducing Merck strain N. lactamdurans MA4213 showed no detectable levels of beta-lactamase activity. The beta-lactamase plays a negative role in cephamycin biosynthesis in solid medium, but not in liquid medium.