Growth of Streptomyces clavuligerus NP1 in the presence of methanol or ethanol resulted in a marked increase in production of cephalosporin(s) from penicillin G by resting cells. The mycelium produced in alcohol-supplemented medium was fragmented and dispersed as compared with growth in control medium. HPLC analysis showed that at least two products were present in the biotransformation supernatant fluid after 1 h incubation. One of them has been identified as deacetoxycephalosporin G (DAOG).