The actinomycete Nonomuraea sp. ATCC39727 produces the glycopeptide A40926. In the corresponding dbv cluster, ORF28 encodes a putative hydroxylase. A gene replacement mutant of ORF28 in Nonomuraea produces a small amount of an A40926-related metabolite, 16 amu smaller than the parent compound, which was identified as the desoxyderivative of A40926 lacking the beta-hydroxyl group on the tyrosine moiety. This result demonstrates that ORF28 is actually involved in the formation of the beta-hydroxytyrosine residue present in A40926. The formation of an altered glycopeptide and the inability to rescue A40926 production upon feeding free beta-hydroxytyrosine are consistent with the possibility that, in contrast to balhimycin formation, hydroxylation occurs after tyrosine activation by the nonribosomal peptide synthetase.