Conditions for genetic transformation of the xylanase-negative (X(-)) strain of Chainia with pIJ 702 were optimized. The growth of Chainia at 30 degrees C for 36 - 40 h and addition of geletin (1%) to the medium resulted In the maximum yield of protoplasts and regeneration efficiency. Poor transformation efficiency of Chainia (X(-)) protoplasts by native pIJ 702 versus improved efficiency (16 transformants ug(-1) of plasmid DNA) by prior heating of protoplasts at 42 degrees C for 10 min suggests the occurrence of a restriction system in Chainia. Increased transformation efficiency by passage of the plasmid through Chainia together with the altered methylation status of the transformant plasmid presents evidence for the existence of an operative modification system in Chainia. Development of thiostrepton resistance and formation of melamin pigment in Chainia (X(-)) by transformation with pIJ 702 reveal that genes from Streptomyces can be functionally expressed by Chainia (X(-)).