Clinically and economically, penicillins and cephalosporins are the most important class of the beta-lactam antibiotics. They are produced by a wide variety of microorganisms including numerous species of Streptomyces, some unicellular bacteria and several filamentous fungi. A key step common to their biosynthetic pathways is the conversion of a linear, cysteine-containing tripeptide to a bicyclic beta-lactam antibiotic by isopenicillin N synthase. Recent successes in the cloning and expression of isopenicillin N synthase genes now permit production of a plentiful supply of this enzyme, which may be used for structural and mechanistic studies, or for biotechnological applications in the creation of novel beta-lactam compounds from peptide analogues. New ideas concerning the evolution and prevalence of the penicillin and cephalosporin biosynthetic genes have emerged from studies of isopenicillin N synthase genes.