We previously reported the isolation and structure determination of pepstatin A and its analogs. In this study, we report the isolation, purification, physicochemical properties, structure, and biological activity of hydroxypepstatin A, which is produced by Streptomyces testaceus through shaking culture or tank fermentation and has serine replacing alanine in pepstatin A. Hydroxypepstatin A was isolated from the culture filtrate via n-butanol extraction, followed by purification using Dowex 1×2 (acetate form) and Amberlite XAD-2 column chromatography. It was obtained as colorless crystals with a melting point of 232.5-233.5°C (decomposition). Elemental analysis and mass spectrometry (TMS-hydroxypepstatin A methyl ester, M+ m/e 931) confirmed its molecular formula as C34H63N5O10·H2O. The compound showed only end absorption in the UV spectrum, a specific infrared spectrum, and an Rf value of 0.20 (compared to 0.35 for pepstatin A) on silica gel thin-layer chromatography with chloroform-methanol-acetic acid (86:12:2). Amino acid hydrolysis and mass spectral fragmentation patterns confirmed its structure, with serine replacing alanine in pepstatin A. Inhibitory activity assays revealed that hydroxypepstatin A had similar activity to pepstatin A against pepsin (ID50 1.7×10^-8 M vs. 1.4×10^-8 M) and cathepsin D (11.4×10^-9 M vs. 8.8×10^-9 M), but slightly weaker activity against renin (20.2×10^-6 M vs. 6.6×10^-6 M).