An enzymatic activity catalyzing P-methylation of N-acetyldemethylphosphinothricin, a biosynthetic intermediate of the herbicide bialaphos, was detected in a cell extract of Streptomyces hygroscopicus SF-1293, a bialaphos producing organism. The gene coding for this P-methylation enzyme in the bialaphos biosynthetic gene cluster was also expressed in Streptomyces lividans. The methyl donor of the reaction was determined to be methylcobalamin. The P-methylation enzyme utilized both N-acetyldemethylbialaphos and N-acetyldemethylphosphinothricin as substrates.