The biosynthesis of the polyketide antibiotic actinorhodin by Streptomyces coelicolor involves the oxidative dimerization and hydroxylation of a precursor, most likely dihydrokalafungin, as the final steps in its formation. Mutations in the actVB gene block these last steps, and the mutants secrete kalafungin as a shunt product. To investigate the role of the actVB gene in these transformation, we have overexpressed the gene in Escherichia coli and purified and characterized the recombinant protein. ActVB was shown to catalyze the reduction of FMN by NADH to give NAD and FMNH2, which, unusually, is released into solution. The protein contains no chromogenic cofactors and exhibits no requirements for added metal ions. The reaction obeys simple kinetics and proceeds through the formation of a ternary complex; Km values for FMN and NADH are 1.5 and 7.3 microM, respectively, and kcat is about 5 s-1. FAD and riboflavin are also substrates for the enzyme, although they have much higher Km values. The subunit structure of the enzyme was investigated by analytical ultracentrifugation, which showed the protein to exist in rapid equilibrium between monomer and dimer forms. The possible role of this oxidoreductase in the oxidative chemistry of actinorhodin biosynthesis is discussed.