At 28 degrees C, Streptomyces lavendulae produced high levels of penicillin V acylase (175 IU/1 of culture) when grown on skim milk as the sole nutrient source for 275 h. The enzyme showed catabolite repression by glucose and was produced in the stationary phase of growth. Penicillin V was a good inducer of penicillin V acylase formation, while phenoxyacetic acid, the side chain moiety of penicillin V, did not alter enzyme production significantly. The enzyme was stable between pH 6 and 11 and at temperatures from 20 degrees C to 55 degrees C. This extracellular enzyme was able to hydrolyse natural penicillins and unable to hydrolyse penicillin G.