Streptomyces lactamdurans produces the lactam antibiotic cephamycin C. We report here the isolation of a nitrosoguanidine-induced mutant strain MA5168 of S. lactamdurans that produces an unusual fermentation product. Compared to the parent strain MA5230, MA5168 exhibited an absorbance peak at 300 nm, significantly reduced cephamycin C bioactivity, and a higher serine protease/cephamycin C ratio. Treatment with Enterobacter cloacae β-lactamase did not diminish the 300 nm peak, indicating the unknown compound lacks a β-lactam ring. The compound was isolated from MA5168 fermentation broth via centrifugation, Dowex 1X2 chloride cycle resin absorption, Bio-Gel P-2 desalting, and microcrystalline cellulose chromatography. Structural analysis by NMR and UV spectroscopy identified it as D-5-amino-5-carboxyvaleramido-(5-formyl-4-carboxy-2H,3H,6H-tetrahydro-1,3-thiazinyl)glycine, which matches the cephalosporate C-2 previously reported in a Cephalosporium acremonium mutant. By analogy, we propose that MA5168 has a partial block in the carbamoylation step of cephamycin C biosynthesis, leading to accumulation of deacetylcephalosporin C that degrades to cephalosporate C-2.