Penicillin biosynthesis from L-valine, L-cysteine, and L-α-aminoadipic acid is known to proceed via the tripeptide L-α-aminoadipoyl-L-cysteinyl-D-valine (LLD-ACV). Previous experiments suggested elimination of a valine-oxygen atom during ACV biosynthesis or its oxidative cyclisation to the penam nucleus, but we showed no oxygen atoms were exchanged during the conversion of ACV to isopenicillin N. We now report that valine is transformed by intact cells of the β-lactam negative mutant N-2 of Cephalosporium acremonium into ACV with both partial and complete loss of both oxygen atoms. To avoid masking by endogenous ACV, [4-²H₆, ¹⁸O₂]valine was synthesised to track the exogenous precursor. The mutant, which excretes ACV and has no active penicillin-forming enzyme, allowed direct examination of valine incorporation into ACV. After feeding labelled valine to the mutant, ACV disulphide and recovered valine were isolated and analysed by mass spectrometry. Results indicated substantial loss of one or both oxygen atoms from valine to ACV. Control experiments demonstrated no extracellular exchange of valinyl oxygens from the tripeptide, confirming the intracellular exchange of one or both valinyl oxygen atoms occurs prior to ACV excretion from intact cells of the N-2 mutant.