In 1945, after penicillin had been introduced into medicine, an antibiotic-producing species of Cephalosporium was isolated from a sewage outfall in Sardinia. Four years later in Oxford, this organism was found to produce several antibiotics, one of which was a penicillin with a new side-chain, penicillin N. During a chemical study in 1953, this penicillin was shown to be contaminated with a second substance, cephalosporin C, which contained a beta-lactam ring but was resistant to hydrolysis by a penicillinase (beta-lactamase). At that time, penicillinase-producing Staphylococci were causing a serious problem in hospitals. The isolation of the nucleus of cephalosporin C (7-ACA) enabled pharmaceutical manufacturers to produce many thousands of cephalosporins, some of which have been effective in the treatment of serious infections by a number of Gram-positive and Gram-negative bacteria. The cephalosporins, like the newer penicillins, have a very low toxicity and have greatly extended the range of chemotherapy. New, sensitive screening methods have revealed further families of clinically useful substances that contain a reactive beta-lactam ring. Genetic engineering has now begun to throw light on the nature of the enzymes that are involved in the biosynthesis of penicillins and cephalosporins, and x-ray crystallography may soon provide detailed 3-dimensional pictures of some of the bacterial enzymes with which the active beta-lactam ring reacts. Rational approaches to the production and design of new and potentially useful compounds may then be within sight.