Resting cells and to a greater extent permeabilized cells of Streptomyces griseus can oxidize dihydrostreptomycin to streptomycin. The dihydrostreptomycin oxidoreductase activity was localized in the 100 000 X g particulate fraction. Sucrose density gradient centrifugation of the particulate suspension gave a band at a density of 1.09 which consisted mainly of membrane vesicles. This fraction had high dihydrostreptomycin oxidoreductase activity. S. griseus protoplasts also contain high oxidoreductase activity. These data are consistent with localization of the enzyme in the cell membrane. Dihydrostreptomycin and dihydrostreptomycin 6-phosphate can both serve as substrates for the oxidoreductase, but the phosphate was the better substrate in the cell free system. Addition of cofactors was not required for the bound dihydrostreptomycin oxidoreductase. The electron acceptor for the oxidation is unknown. Oxidation of dihydrostreptomycin 6-phosphate to streptomycin 6-phosphate very probably represents the penultimate step in the biosynthesis of streptomycin.