A novel inhibitor of angiotensin I converting enzyme (ACE), named K-4, was isolated from the culture broth of Actinomadura spiculosospora nov. sp. K-4. The K-4 was an oligopeptide containing L-phenylalanine with (R)-1-amino-2-(4-hydroxyphenyl)ethylphosphonic acid as the C-terminal residue. The compound proved to be a specific and reversible inhibitor of ACE with the inhibition constant (Ki) of 0.18 microM, and inhibited ACE non-competitively by use of hippuryl-L-histidyl-L-leucine (HHL) as a substrate. When administrated intravenously to rats, K-4 inhibited the pressor response to angiotensin I.