In Bacillus cereus 569 a cellular inducer of,-lactamase was isolated which has the same constituents and basic structure as the soluble peptidoglycan found in sporulation, extracts from spores, and germination extracts, and which was previously called "spore-peptide." The material has been extensively purified and characterized. Two acid-soluble, high-molecular-weight peptidoglycan fractions containing muramic acid, glucosamine, diaminopimelic acid, D-aspartate, and D-and L-alanine, -lysine, -glycine, and -glutamate, distinguishable on the basis of size and different amino acid to amino sugar ratios, have been found to be responsible for the observed induction. Both fractions are capable of inducing high levels of 3-lactamase in concentrations lower than those of benzyl penicillin required for optimal induction. Several experiments also suggest that it is the accumulation of such soluble peptidoglycan in penicillin-treated cells which leads to induction of f3-lactamase and not the penicillin itself. The "spore-peptide" inducer becomes available during sporulation, and endogenous derepression ofj-lactamase activity occurs simultaneously. Such derepression also occurs in a strain of B. cereus very sensitive to penicillin and in which both uninduced as well as "spore-peptide"-induced #-lactamase is a small fraction of that produced by the typical penicillinase producer. These results suggest that ,B-lactamase in B. cereus functions in cell wall metabolism during sporulation. The hypothesis favored by many (see e.g., 34), that penicillinase evolved in bacteria as a result of offering selective advantage to producing cells by its ability to hydrolyze penicillin, has been questioned by others almost since the time the enzyme was isolated nearly 30 years ago. Indeed, Abraham, who fiast reported the presence of the I Portions of this work were used in partial fulfilment of the requirements for the Ph.thesda, Md. 20014. 52 the discovery of the transpeptidation reactions (43,46).Previous studies in this laboratory (36, 37) have shown that several cyclic and linear peptides as well as penicillins are capable of inducing high levels of ,B-lactamase in Staphylococcus aureus and Bacillus cereus 569. Since numerous peptides, both cyclic and linear, are produced by the genus Bacillus and since penicillin is also a cyclic peptide, we thought it feasible to look for inducing activity in cell-free preparations from B. cereus. Such an inducer has been isolated from sporulating cultures of B. cereus 569 and found to be a soluble peptidoglycan with inducing activity superior to that of penicillin. Other strains of B. cereus also produced indcing peptidoglycan. This report describes induction with the cellular inducer and presents its partial chemical characterization as well as evidence suggesting involvement of the a-type f3-lactamase of B. cereus in peptidoglycan metabolism during sporulation.