Deacetoxycephalosporin C (DAOC) is produced by Acremonium chrysogenum as an intermediate compound in the cephalosporin C biosynthetic pathway, and is present in small quantities in cephalosporin C fermentation broth. This compound forms an undesirable impurity, 7-aminodeacetoxycephalosporanic acid (7-ADCA), when the cephalosporin C is converted chemically or enzymatically to 7-aminocephalosporanic acid (7-ACA). In the cephalosporin C biosynthetic pathway of A. chrysogenum, the bifunctional expandase/hydroxylase enzyme catalyzes the conversion of penicillin N to DAOC and subsequently deacetylcephalosporin C (DAC). By genetically engineering strains for increased copy number of the expandase/hydroxylase gene, we were able to reduce the level of DAOC present in the fermentation broth to 50% of the control. CHEF gel electrophoresis and Southern analysis of DNA from two of the transformants revealed that one copy of the transforming plasmid had integrated into chromosome VIII (ie a heterologous site from the host expandase/hydroxylase gene situated on chromosome II). Northern analysis indicated that the amount of transcribed expandase/hydroxylase mRNA in one of the transformants is increased approximately two-fold over that in the untransformed host.