Two genes, cmcI and cmcJ, corresponding to open reading frames 7 and 8 (ORF7 and ORF8) of the cephamycin C cluster of Nocardia lactamdurans encode enzymes that convert cephalosporin C to 7-methoxycephalosporin C. Proteins P7 and P8 (the products of ORF7 and ORF8 expressed in Streptomyces lividans) introduce the methoxyl group at C-7 of the cephem nucleus. Efficient hydroxylation at C-7 and transfer of the methyl group from S-adenosylmethionine require both proteins P7 and P8, although P7 alone shows weak C-7 hydroxylase activity and strong cephalosporin-dependent NADH oxidase activity. Both P7 and P8 appear to be synthesized in a coordinated form by translational coupling of cmcI and cmcJ. Protein P7 contains domains that correspond to conserved sequences in cholesterol 7␣-monooxygenases and to the active center of Omethyltransferases by comparison with the crystal structure of catechol-O-methyltransferase. Protein P8 may act as a coupling protein for efficient hydroxylation at C-7 in a form similar to that of the two-component system of Pseudomonas putida p-hydroxyphenylacetate-3-hydroxylase.Cephamycin C is synthesized in Nocardia lactamdurans and Streptomyces clavuligerus from precursor amino acids L-␣-aminoadipic acid, L-cysteine, L-valine, and L-methionine. The first three amino acids are linked to form the corresponding tripeptide by the multienzyme ␣-aminoadipyl-cysteinyl-valine synthetase (2, 5), which is encoded by the pcbAB gene (10). The ␣-aminoadipyl-cysteinyl-valine tripeptide is cyclized to form isopenicillin N, and this intermediate is epimerized to form penicillin N, which is later converted to deacetoxycephalosporin C by deacetoxycephalosporin C synthase (expandase). The genes encoding these three enzymatic steps, pcbC, cefD, and cefE, in N. lactamdurans are known to be clustered with lat (which encodes lysine-6-aminotransferase) and pcbAB (9, 11). Further reactions are involved in the synthesis of the C-7 methoxyl group and in the attachment of the carbamoyl group at C-3Ј. Little information is available about the so-called late genes, which convert deacetoxycephalosporin C into cephamycin C. Deacetoxycephalosporin C is known to be hydroxylated to deacetylcephalosporin C in S. clavuligerus by an ␣-ketoglutarate-requiring 3Ј-methylcephem hydroxylase (4, 16). Deacetylcephalosporin C is converted into O-carbamoyldeacetylcephalosporin C by an O-carbamoyltransferase that transfers a carbamoyl group from carbamoylphosphate to the 3Ј-hydroxyl group of deacetylcephalosporin C (6). The methoxyl group at C-7 in the cephamycins derives from molecular oxygen (15) and methionine (18) by the apparent action of an oxygenase and a methyltransferase.At least three types of oxygenases are involved in hydroxylations of microbial metabolites. The first class are ␣-ketoglutarate dependent and require Fe 2ϩ ions to introduce one of the oxygen atoms from O 2 into the substrate (1). A second class of flavin monooxygenases (e.g., p-hydroxybenzoate hydroxylase, salicylate hydroxylase, phenol hydroxylase, melilolate hydro...