The dps genes of Streptomyces peucetius, encoding daunorubicin (DNR)-doxorubicin (DXR) polyketide synthase (PKS), are largely within an 8.7-kb region of DNA that has been characterized by Southern analysis, and gene sequencing, mutagenesis and expression experiments. This region contains nine ORFs, many of whose predicted products are homologous to known PKS enzymes. Surprisingly, the gene encoding the DXR PKS acyl carrier protein is not in this region, but is located about 10 kb distant from the position it usually occupies in other gene clusters encoding type-II PKS. An in-frame deletion in the dpsB gene, encoding a putative subunit of the DXR PKS, resulted in loss of production of DXR and the known intermediates of its biosynthetic pathway, confirming that this gene and, by implication, the adjacent dps genes are required for DXR biosynthesis. This was verified by expression of the dps genes in the heterologous host, Streptomyces lividans, which resulted in the production of aklanonic acid, an early intermediate of DXR biosynthesis.