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In Streptomyces clavuligerus, the gene cluster involved in the biosynthesis of the clinically used β-lactamase inhibitor clavulanic acid contains a gene (orf12 or cpe) encoding a protein with a C-terminal class A β-lactamase-like domain. The cpe gene is essential for clavulanic acid production, and the recent crystal structure of its product (Cpe) was shown to also contain an N-terminal isomerase/cyclase-like domain, but the function of the protein remains unknown. In the current study, we show that Cpe is a cytoplasmic protein and that both its N- and C-terminal domains are required for in vivo clavulanic acid production in S. clavuligerus. Our results along with those from previous studies allude towards a biosynthetic role for Cpe during the later stages of clavulanic acid production in S. clavuligerus. Amino acids from Cpe essential for biosynthesis were also identified, including one (Lys89) from the recently described N-terminal isomerase-like domain of unknown function. Homologues of Cpe from other clavulanic acid-producing Streptomyces spp. were shown to be functionally equivalent to the S. clavuligerus protein, whereas those from non-producers containing clavulanic acid-like gene clusters were not. The suggested in vivo involvement of an isomerase-like domain recruited by an ancestral β-lactamase related protein, supports a previous hypothesis that Cpe could be involved in a step requiring the opening and modification of the clavulanic acid core during its biosynthesis from 5S precursors., Competing Interests: The authors have declared that no competing interests exist.