Deacetoxycephalosporin C synthetase (expandase), which catalyzes ring expansion of penicillin N to deacetoxycephalosporin C (DAOC), has been stabilized in vitro and purified to near homogeneity from the industrially important fungus Cephalosporium acremonium. Throughout the purification, the expandase activity remained physically associated with and in a constant ratio of 7:1 to DAOC hydroxylase activity. The latter activity mediates hydroxylation of DAOC to deacetylcephalosporin C (DAC). The copurified expandase/hydroxylase appeared to be monomeric, with a molecular weight of 41,000 +/- 2,000 and an isoelectric point of 6.3 +/- 0.3. Both catalytic activities required alpha-ketoglutarate, Fe2+, and O2 and were stimulated by ascorbate, dithiothreitol, and ATP. The Fe2+ requirement was specific, and sulfhydryl groups in the purified protein were apparently essential for both ring expansion and hydroxylation. The kinetics and stoichiometry of DAOC/DAC formation from the expandase/hydroxylase-catalyzed reactions suggested that ring expansion of penicillin N preceded hydroxylation of DAOC.