The actinomycin synthetases ACMS I, II, and III catalyze the assembly of the acyl peptide lactone precursor of actinomycin by a nonribosomal mechanism. We have cloned the genes of ACMS I (acmA) and ACMS II (acmB) by hybridization screening of a cosmid library of Streptomyces chrysomallus DNA with synthetic oligonucleotides derived from peptide sequences of the two enzymes. Their genes were found to be closely linked and are arranged in opposite orientations. Hybridization mapping and partial sequence analyses indicate that the gene of an additional peptide synthetase, most likely the gene of ACMS III (acmC), is located immediately downstream of acmB in the same orientation. The protein sequence of ACMS II, deduced from acmB, shows that the enzyme contains two amino acid activation domains, which are characteristic of peptide synthetases, and an additional epimerization domain. Heterologous expression of acmB from the mel promoter of plasmid PIJ702 in Streptomyces lividans yielded a functional 280-kDa peptide synthetase which activates threonine and valine as enzyme-bound thioesters. It also catalyzes the dipeptide formation of threonyl-L-valine, which is epimerized to threonyl-D-valine. Both of these dipeptides are enzyme bound as thioesters. This catalytic activity is identical to the in vitro activity of ACMS II from S. chrysomallus.