The anthracycline-like polyketide drug elloramycin is produced by Streptomyces olivaceus Tü2353. Elloramycin has antibacterial activity against Gram-positive bacteria and also exhibits antitumor activity. From a cosmid clone (cos16F4) containing part of the elloramycin biosynthesis gene cluster, three genes (elmMI, elmMII, and elmMIII) have been cloned. Sequence analysis and data base comparison showed that their deduced products resembled S-adenosylmethionine-dependent O-methyltransferases. The genes were individually expressed in Streptomyces albus and also coexpressed with genes involved in the biosynthesis of l-rhamnose, the 6-deoxysugar attached to the elloramycin aglycon. The resulting recombinant strains were used to biotransform three different elloramycin-type compounds: l-rhamnosyl-tetracenomycin C, l-olivosyl-tetracenomycin C, and l-oleandrosyl-tetracenomycin, which differ in their 2'-, 3'-, and 4'-substituents of the sugar moieties. When only the three methyltransferase-encoding genes elmMI, elmMII, and elmMIII were individually expressed in S. albus, the methylating activity of the three methyltransferases was also assayed in vitro using various externally added glycosylated substrates. From the combined results of all of these experiments, it is proposed that methyltransferases ElmMI, ElmMII, and ElmMIII are involved in the biosynthesis of the permethylated l-rhamnose moiety of elloramycin. ElmMI, ElmMII, and ElmMIII are responsible for the consecutive methylation of the hydroxy groups at the 2'-, 3'-, and 4'-position, respectively, after the sugar moiety has been attached to the aglycon.