Two genes, claR and car, encoding proteins involved in clavulanic acid biosynthesis, have been found in a 2.8-kb BglII-EcoRI DNA fragment of Streptomyces clavuligerus adjacent to the region containing the cephamycin and clavulanic acid biosynthesis gene cluster. claR encoded a protein of 431 amino acids (deduced Mr 47080), that showed a significant degree of homology with several transcriptional activators of the LysR family. The ClaR protein contained two helix-turn-helix (HTH) motifs in the amino and carboxyl terminal regions. The second gene, car, encoded a protein of 247 amino acids (Mr 26629) that showed a strong similarity to oxydoreductases of the SDR family. Twelve amino acids of the amino-terminal region were identical to those previously obtained by Edman degradation of the purified clavulanic-9-aldehyde reductase of S. clavuligerus. Amplification of the claR gene in multicopy plasmids resulted in a threefold increase in clavulanic acid production and in a five- to sixfold increase of alanylclavam biosynthesis, whereas cephamycin production was significantly reduced both in defined and in complex media. By contrast, amplification of the car gene had no significant effect on clavulanic acid and alanylclavam or cephamycin production. Both claR and car are expressed as monocistronic transcripts; the level of transcript declined rapidly after 48h in complex media, but low sustained levels of both transcripts were observed in defined GSPG medium until 96h. claR and car were not significantly expressed in mutants disrupted in the ccaR gene, a regulatory gene that controls positively clavulanic acid and cephamycin biosynthesis. These results indicate that clavulanic acid and cephamycin biosynthesis in S. clavuligerus is controlled by a cascade of regulatory proteins that include CcaR and ClaR.