A gene (ips) encoding the isopenicillin N synthase of Penicillium chrysogenum AS-P-78 was cloned in a 3.9 kb SalI fragment using a probe corresponding to the amino-terminal end of the enzyme. The SalI fragment was trimmed down to a 1.3 kb NcoI-BglII fragment that contained an open reading frame of 996 nucleotides encoding a polypeptide of 331 amino acids with an Mr of 38012 dalton. The predicted polypeptide encoded by the ips gene of strain AS-P-78 contains a tyrosine at position 195, whereas the gene of the high penicillin producing strain 23X-80-269-37-2 shows an isoleucine at the same position. The ips gene is expressed in Escherichia coli minicells using the lambda phage PL promoter. Some similar sequence motifs were found in the upstream region of the ips gene of P. chrysogenum when compared with the upstream sequences of the ips genes of Cephalosporium acremonium and Aspergillus nidulans. Primer extension studies indicated that the start of the mRNA coincides with a T in position -11 which is located in a conserved pyrimidine-rich sequence, near two CAAG boxes. Clones of P. chrysogenum Wis 54-1255 transformed with the ips gene showed a five-fold higher isopenicillin N synthase activity than the untransformed cultures.