Streptomyces tendae Tuë 901/8c produces an extracellular hydrophobic peptide, termed streptofactin. The compound was isolated from conditioned agar medium and characterized. Streptofactin is a mixture of structurally related peptides with the major components ranging in size from 1003 m/z to 1127 m/z. Extracellular application of the purified peptide restored the capacity to form aerial mycelium in mutants defective in morphological development. Surface activity measurements revealed that streptofactin decreased the surface tension of water from 72.0 mN m31 to 39.4 mN m31 and achieved a critical micelle concentration value of 36 mg l31. The properties of streptofactin suggest that it plays a structural role in aerial mycelium development and supports the erection of aerial hyphae by lowering the surface tension of water films enclosing the colonies. A model for aerial mycelium formation which represents a novel mechanism for the adaption to environmental changes in Streptomyces is proposed.