Escherichia coli cells carrying fosfomycin-resistance plasmids modify fosfomycin intracellularly. The product of this modification (fosfomycin-derivative) differs from fosfomycin in chromatographic mobility, but the chemical nature of the modification is not yet known. Fosfomycin-derivative appears to have a cytoplasmic location and lacks antibiotic activity. The modification system can be saturated by an excess of fosfomycin in the incubation media.