Natural antibiotics are almost universal secondary metabolites, not essential for the growth of the producing organisms generally produced at low growth rates or after growth has ceased. Clavulanic acid (CA), a naturally occurring powerful inhibitor of bacterial beta-lactamases is a major beta-lactam antibiotic produced by organism Streptomyces clavuligerus and is active against a wide spectrum of Gram-positive and Gram-negative bacteria. The review discusses the biosynthetic pathway, fermentative production, downstream processing and applications of CA.