The biosynthetic pathway of the type B lantibiotic actagardine (formerly gardimycin), produced by Actinoplanes garbadinensis ATCC31049, has been cloned, sequenced and annotated. The gene cluster contains the gene garA that encodes the actagardine prepropeptide, a modification gene garM, involved in the dehydration and cyclization of the prepeptide, several putative transporter and regulatory genes as well as a novel luciferase-like monooxygenase gene designated garO. Expression of these genes in Streptomyces lividans resulted in the production of ala(0)-actagardine while deletion of the garA gene from A. garbadinensis generated a strain incapable of producing actagardine. Actagardine production was successfully restored however, by the delivery of the plasmid pAGvarX. This plasmid contains an engineered cassette of the actagardine encoding gene garA and offers an alternative route to generating extensive libraries of actagardine variants. Using this plasmid, an alanine scanning library has been constructed and the mutants analysed. Further modifications include the removal of the novel garO gene from A. garbadinensis. Deletion of this gene resulted in the production of deoxy variants of actagardine, demonstrating that the formation of the sulfoxide group is enzyme catalysed and not a spontaneous chemical modification as previously believed.