The gene rif orf14 in the rifamycin biosynthetic gene cluster of Amycolatopsis mediterranei S699, producer of the antitubercular drug rifamycin B, encodes a protein of 272 amino acids identified as an AdoMet: 27-O-demethylrifamycin SV methyltransferase. Frameshift inactivation of rif orf14 generated a mutant of A. mediterranei S699 that produces no rifamycin B, but accumulates 27-O-demethylrifamycin SV (DMRSV) as the major new metabolite, together with a small quantity of 27-O-demethyl-25-O-desacetylrifamycin SV (DMDARSV). Heterologous expression of rif orf14 in Escherichia coli yielded a 33.8-kDa polyhistidine-tagged polypeptide, which efficiently catalyzes the methylation of DMRSV to rifamycin SV, but not that of DMDARSV or rifamycin W. 27-O-Demethylrifamycin S was methylated poorly, if at all, by the enzyme to produce rifamycin S. The purified enzyme does not require a divalent cation for catalytic activity. While Ca(2+) or Mg(2+) inhibits the enzyme activity slightly, Zn(2+), Ni(2+), and Co(2+) are strongly inhibitory. The K(m) values for DMRSV and S-adenosyl-L-methionine (AdoMet) are 18.0 and 19.3 microM, respectively, and the K(cat) is 87s(-1). The results indicate that DMRSV is a direct precursor of rifamycin SV and that acetylation of the C-25 hydroxyl group must precede the methylation reaction. They also suggest that rifamycin S is not the precursor of rifamycin SV in rifamycin B biosynthesis, but rather an oxidative shunt-product.