During recent years, members of a novel class of β-lactam antibiotics containing a carbapenem nucleus have been reported. Studies with a culture of Streptomyces olivaceus CBS 349.80 capable of producing members of the olivanic acid series of carbapenem antibiotics demonstrated the presence of a new related antibiotic designated MM 27696. Culture filtrate was produced by growing the strain in a fermentation medium composed of glucose 4%, soybean flour 2%, CaCO3 0.04%, CoCl2·6H2O 0.0002%, Na2SO4 0.1%, and Pluronic L81 antifoam 0.2% (v/v). MM 27696 was extracted via ion pair extraction (using Aliquat 336 in dichloromethane) and purified through processes including adsorption on Diaion HP20, chromatography on QAE Sephadex A25, Biogel P2, and reversed phase HPLC; 3,800 liters of culture filtrate yielded approximately 15 mg of substantially pure disodium salt. It was assayed by C18 reversed phase HPLC with 5% acetonitrile in 0.05 M ammonium phosphate buffer (pH 4.7) and UV monitoring at 300 nm. The UV spectrum (maxima at 306 nm and 228 nm) was similar to MM 13902, while thin-layer and paper chromatography showed greater lipophilicity for MM 27696. MM 27696 exhibited broad spectrum antibacterial activity and potent β-lactamase inhibitory activity. Its structure was determined by conversion to the p-nitrobenzyl ester; IR, UV, 1H NMR (showing a propionamido function replacing the acetamido moiety in the C-3 side chain, with a three-proton triplet at δ 1.07 and two-proton quartet at δ 2.31 instead of the acetyl singlet) and 13C NMR spectra confirmed the structure. The discovery of MM 27696, an olivanic acid derivative with the acetyl function in the C-3 side chain replaced by a propionyl group, suggests the possibility of the natural occurrence of a range of such compounds with altered acyl sidechains.