Deacetoxycephalosporin C synthetase (expandase) from Cephalosporium acremonium (Acremonium chrysogenum) was purified to near homogeneity as judged by SDS/polyacrylamide-gel electrophoresis. The enzyme (Mr about 40,000) exhibited a pH optimum around 7.5. It required 2-oxoglutarate (Km 0.04 mM), Fe2+ and O2 as cofactors, and ascorbate and dithiothreitol were necessary for maximum activity. It was stable for over 4 weeks at -70 degrees C in the presence of 1 mM-dithiothreitol. Activity was inhibited by the thiol-quenching reagent N-ethylmaleimide, the metal-ion-chelating reagent bathophenanthroline, and NH4HCO3. The highly purified enzyme also showed deacetoxycephalosporin C hydroxylase (deacetylcephalosporin C synthetase) activity, indicating that both expandase and hydroxylase activities are properties of a single protein. These activities could not be separated by ion-exchange, dye-ligand, gel-filtration or hydrophobic chromatography. A beta-sulphoxide and a 3 beta-methylene hydroxy analogue of penicillin N were synthesized to test as potential intermediates in the ring-expansion reaction, Neither compound was a substrate for the enzyme. A synthetic analogue in which the 3 beta-methyl group and the 2-hydrogen atom of penicillin N were replaced by a cyclopropane ring was not a substrate but was a reversible inhibitor of the enzyme.