We have cloned and sequenced a gene (spaN) from Streptococcus lactis ATCC 11454 which encodes the peptide precursor of the small protein antibiotic nisin. The encoded precursor is 57 amino acids long, with a 23-residue leader region and a 34-residue structural region. The structural region contains serines, threonines, and cysteines at exactly the positions required to give mature nisin by a series of post-translational modifications involving dehydration of serines and threonines to dehydro forms, and cross-linking with cysteine residues. S1 mapping revealed a 267-nucleotide transcript of the nisin gene that is expressed during vegetative growth and stationary phase. It has a half-life of 7-10 min. The absence of an identifiable promoter or rho-independent terminator and the detection of two different 5'-ends of the transcript suggested it is a processing product from a larger RNA. This may represent a polycistronic mRNA which may also encode proteins involved in processing the nisin precursor peptide. Open reading frames were found in regions flanking the nisin gene. The one downstream had a ribosome binding site and appeared to be transcribed by read-through from the nisin gene. The one upstream had significant homology to a putative transposase from the Escherichia coli IS2 insertion element. Comparison of gene sequence homologies between nisin and the other lanthionine antibiotics, subtilin and epidermin, indicated that they all evolved from a common ancestor. Corresponding leader peptide sequences showed mediocre amino acid homology, but nearly perfect hydropathic homologies, suggesting a common function. It is proposed that this function includes recognition signals or other information required for post-translational processing.