Streptomyces clavuligerus produces the beta-lactam antibiotics penicillin N, O-carbamoyldeacetylcephalosporin C and cephamycin C. We characterized a wild-type DNA region which restores antibiotic formation to a mutant strain named NP1, previously shown to exhibit depressed activities for two early enzymes of cephalosporin synthesis, delta-(L-alpha-aminoadipyl)-L-cysteinyl-D-valine synthetase (ACVS) and isopenicillin N synthase (IPNS). L-Lysine epsilon-aminotransferase (LAT) assays and alpha-AAA feeding experiments suggested that strain NP1 is a lat mutant. NP1 recovered LAT, ACVS and IPNS activities when transformed with the cloned region. DNA sequencing showed that this region encodes the entire LAT gene (lat), required for the conversion of L-lysine to the beta-lactam precursor L-alpha-aminoadipic acid (alpha-AAA), as well as the upstream half of the ACVS gene (pcbAB). The activities of ACVS and IPNS appear to depend upon LAT expression. Gene fusions constructed to investigate promoter activities in the cloned region support a model of interdependence in the expression of the genes for LAT, ACVS and IPNS (pcbC).