The dnrF gene, responsible for conversion of aklavinone to epsilon-rhodomycinone via C-11 hydroxylation, was mapped in the daunorubicin (Dnr) gene cluster of Streptomyces peucetius ATCC 29050, close to drrAB, one of the anthracycline-resistance genes. The dnrF gene was sequenced and should encode a protein of 489 amino acids with a molecular mass of 52 kDa. The deduced DnrF protein shows significant similarities with bacterial FAD- and NADPH-dependent hydroxylases either required to introduce hydroxyl groups into polycyclic aromatic polyketide antibiotics or involved in catabolism of aromatic compounds. Heterologous expression of dnrF in Streptomyces lividans TK23 and in Escherichia coli demonstrated that the gene encodes a NADPH-dependent hydroxylase catalysing the hydroxylation of aklavinone to yield epsilon-rhodomycinone. The enzyme is inactive on anthracyclines glycosylated at position C-7 and its activity decreases to a different extent with other substrate modifications, indicating that DnrF has a significant substrate specificity.