A translational fusion has been constructed between the amdS gene of Aspergillus nidulans and the lacZ gene of Escherichia coli. Sequencing across the fusion junction confirmed the generation of an in-frame fusion at amino acid 34 of amdS and a novel protein has been detected in transformants carrying the fusion plasmid. Transformants of A. nidulans and Aspergillus niger carrying the fusion plasmid were obtained by co-transformation with a second selectable plasmid. These transformants were readily identified on media containing XGal. The intensity of the reaction on XGal media was indicative of the number of copies of the fusion plasmid carried by the transformants. The growth of highly expressing strains of A. nidulans was inhibited on XGal media. The fusion plasmid was used to develop a two-step gene replacement strategy in which the resident amdS gene was replaced with the fusion gene free of vector sequences. Plate tests and in vitro assays of the beta-galactosidase enzyme confirmed that expression of the fusion gene was regulated by amdS flanking sequences and trans-acting regulatory genes.