In the course of our screening program for active substances of microbial origin, an antifungal antibiotic complex was isolated from the culture broth of a strain of Streptomyces hygroscopicus B-7 and designated AK-B7. It is a complex of non-polyenic antifungal antibiotics. In the previous paper, taxonomy of the producing organism S. hygroscopicus B-7 and biological activity of the antibiotic complex were presented. In this report we describe the production, isolation, physico-chemical properties and the structure elucidation of the non-polyenic antibiotic AK-B7-3 (malonylniphimycin) through the use of two-dimensional NMR techniques. Malonylniphimycin was isolated as a colorless powder with melting point of 114-116°C, optically active with [α]₅₅⁰ value of +36.5° (c=0.5, MeOH), soluble in lower alcohols, dimethylsulfoxide, N,N-dimethylformamide but insoluble in ethyl acetate, chloroform and water, giving positive reactions to potassium permanganate, 3% vanillin-sulphuric acid solution, Dragendorf and Sakaguchi test. Its UV spectrum in MeOH showed absorption maximum at 232nm (ε 2200). Structural analysis via 2D NMR (¹H COSY, ¹H-¹³C COSY) revealed two malonyl residues at C-23 and C-19. Malonylniphimycin possesses biological activity against Gram-positive bacteria, fungi and yeasts, but lower activity than niphimycin A.