A DNA vector for expressing an oxygen-binding heme protein (Vitreoscilla hemoglobin, or VHb) in filamentous fungi was constructed and introduced into a cephalosporin C-producing strain of Acremonium chrysogenum. Expression of VHb in transformants was demonstrated by Western immunoblot analysis and by increased carbon monoxide binding activity of cell extracts. Several VHb-expressing transformants produced significantly higher yields of cephalosporin C than control strains in batch culture experiments. Using the same vector system, VHb was also expressed in the related fungus Penicillium chrysogenum.