Streptomyces peucetius var. caesius, obtained from S. peucetius, the daunomycin producing microorganism, by mutagenic treatment, differs from the parent culture by the color of the vegetative and aerial mycelia and by its antibiotic producing ability. S. peucetius var. caesius accumulates adriamycin in submerged and aerated culture on a medium containing glucose, brewer's yeast, and inorganic salts both in shake flasks and in stirred fermenters. Isolation of the product is performed by solvent extraction, chromatography on buffered cellulose columns, and crystallization as the hydrochloride. The new antitumor agent, adriamycin, is the 14-hydroxy derivative of daunomycin.