The gene (cefG) encoding the acetyl coenzyme A:deacetylcephalosporin C acetyltransferase of Cephalosporium acremonium (synonym Acremonium chrysogenum) C10 has been cloned. It contains two introns and encodes a protein of 444 amino acids with an M(r) of 49,269 that correlates well with the M(r) deduced by gel filtration. The cefG gene is linked to the cefEF gene (encoding the bifunctional deacetoxycephalosporin C synthase/hydroxylase), but it is expressed in an orientation opposite that of the cefEF gene. Two transcripts of 1.2 and 1.4 kb were found in C. acremonium that correspond to the cefEF and cefG genes, respectively; the degree of expression of the cefG gene was clearly lower than that of the cefEF gene in 48-h cultures. The cloned cefG complemented the deficiency of deacetylcephalosporin acetyltransferase in the nonproducer mutant C. acremonium ATCC 20371 and restored cephalosporin biosynthesis in this strain. Heterologous expression of the cefG genes took place in Penicillium chrysogenum. The deacetylcephalosporin acetyltransferase showed a much higher degree of homology with the O-acetylhomoserine acetyltransferases of Saccharomyces cerevisiae and Ascobolus immersus than with other O-acetyltransferases. The cefEF-cefG cluster of genes encodes the enzymes that carry out the three late steps of the cephalosporin biosynthetic pathway and is not linked to the pcbAB-pcbC gene cluster that encodes the first two steps of the pathway.