Soil Actinomycetales that produce antibiotics during growth on agar but not in submerged culture were searched for and about 25 strains were obtained. One of these, Streptomyces halstedii, strain SF-1993, which produces an antibiotic designated SF-1993 was studied taxonomically and morphologically. The antibiotic-productivity of strain SF-1993 was correlated with mycelial morphology. The vegetative mycelium was filamentous in antibiotic-producing agar cultures, but fragmented in non-producing submerged cultures. By maintaining submerged cells filamentous, production of antibiotic in the submerged fermentations was accomplished. Filamentation was maintained by the use of diluted media or non-fragmented mutant substrains.