A system for gene disruption and replacement based on a streptomycete temperate phage vector was developed to introduce DNA in the rapamycin-producing Streptomyces hygroscopicus strain ATCC 29253. This will be useful in attempts to produce, through genetic manipulation, novel forms of the therapeutically important immunosuppressive drug rapamycin. Recombinant phages were constructed from the phi C31 phage derivative KC515 (C+ attp) carrying a thiostrepton or viomycin resistance gene along with segments of the S. hygroscopicus chromosome. Each of the cloned segments also contained the aphll neomycin/kanamycin resistance gene to enable gene replacement by loss of the phage-derived DNA. Specific deletion of the entire polyketide synthase (PKS) believed to govern rapamycin biosynthesis resulted in the loss of rapamycin production. In contrast, disruption or deletion of a region predicted to encode four PKS open reading frames, or another region predicted to encode another PKS plus a cytochrome P450 hydroxylase and ferredoxin, had no effect on the production of rapamycin or nigericin, a polyether antibiotic also produced by S. hygroscopicus. Therefore, S. hygroscopicus may have the capacity to produce polyketides additional to rapamycin and nigericin.