Eurystatins A and B were isolated from the cultured broth of Streptomyces eurythermus R353-21. They showed specific and potent inhibitory activity against prolyl endopeptidase and did not show antimicrobial activity. No lethal toxicity was observed for the two compounds after ip administration in mice at 200 mg/kg. In the course of systematic screening for prolyl endopeptidase inhibitors, Streptomyces eurythermus R353-21 was found to produce these novel inhibitors designated eurystatins A and B. This paper presents the taxonomy of the producing strain, and the production, isolation, and biological activities of eurystatins A and B. Physico-chemical properties and structural studies will be reported in the accompanying paper.