Bacillus subtilis YB8 produces the lipopeptide antibiotic plipastatin. B. subtilis MI113, which is a derivative of strain 168, was converted into a new plipastatin producer, strain 406, by competence transformation with the chromosomal DNA of YB8. Transposon mini-Tn10 insertional mutagenesis was applied to strain 406, which revealed that lpa-8 (sfp) (encoding 4'-phosphopantetheinyl transferase) and the pps operon (located between 167 and 171 degrees ) are essential for plipastatin production. The pps operon was previously suggested to encode putative peptide synthetases (A. Tognoni, E. Franchi, C. Magistrelli, E. Colombo, P. Cosmina, and G. Grandi, Microbiology 141:645-648, 1995) and was thought to be the fengycin operon (V. Tosato, A. M. Albertini, M. Zotti, S. Sonda, and C. V. Bruschi, Microbiology 143:3443-3450, 1997). We claim that the pps operon is the pli operon, encoding plipastatin synthetase. By using a new high-performance liquid chromatography system, we revealed that strain 168 expressing only lpa-8 can also produce plipastatin, although the yield is very low. However, the introduction of the pleiotropic regulator degQ of strain YB8 into strain 168 expressing lpa-8 resulted in a 10-fold increase in the production of plipastatin.