The BamHI fragment containing the actIII gene, from the actinorhodin (Act) biosynthetic gene cluster of Streptomyces coelicolor A3(2), was sequenced. The derived amino acid sequence for the actIII gene shows homology to known oxidoreductases and the actIII product is believed to be responsible for catalysing a beta-keto reductive step during assembly of the Act polyketide chain. High resolution transcript mapping identified the transcription start point at 33 nucleotides upstream of the putative translation start codon. The transcript ends in a large invertedly repeated sequence. In vivo promoter-probe studies suggest that efficient transcription of the actIII gene requires the product of the actII gene.