We recently described the isolation and sequence analysis of the daunomycin polyketide synthase biosynthesis genes of Streptomyces sp. strain C5 (J. Ye, M. L. Dickens, R. Plater, Y. Li, J. Lawrence, and W. R. Strohl, J. Bacteriol. 176:6270-6280, 1994). Contiguous to the daunomycin polyketide synthase biosynthesis gene region in Streptomyces sp. strain C5 are four additional genes involved in daunomycin biosynthesis, two of the products of which show similarity to different types of methyltransferases. The dauC gene, encoding aklanonic acid methyltransferase (AAMT), complements dauC-blocked mutants of Streptomyces sp. strain C5, restores in vitro AAMT activities to the mutant strains, and confers in vitro AAMT activity on Streptomyces lividans. Partial purification through gel filtration, followed by photoaffinity labeling of enriched AAMT with S-adenosyl-L-[3H-methyl]methionine, indicates that AAMT is a homodimer with an M(r) of ca. 48,000 (subunit M(r) of ca. 24,000), which corresponds with the size of the deduced gene product. The dauD gene, encoding aklanonic acid methyl ester cyclase, is divergently arranged with respect to dauC. Immediately downstream and apparently translationally coupled with dauD is the dauK gene, encoding carminomycin 4-O-methyltransferase. The dauK gene confers in vitro carminomycin 4-O-methyltransferase activity on S. lividans and is nearly identical to a similar gene isolated from Streptomyces peucetius and characterized. Directly downstream of dauK lies a gene encoding a deduced protein that is similar to the methyl esterases.