The final step in the biosynthesis of mycophenolic acid involves the transfer of a methyl group from S-adenosylmethionine to demethylmycophenolic acid. The enzyme, S-adenosylmethionine:demethylmycophenolic acid O-methyltransferase, was isolated from Penicillium stoloniferum and purified 2,700-fold by ammonium sulfate fractionation and diethylaminoethyl-cellulose and Sephadex G-200 chromatography. Maximum enzyme activity was achieved at pH 7.5 and a temperature of 27 to 28 C. The apparent K(m) for demethylmycophenolic acid was 3.1 x 10(-6) M. The enzyme preparation was 50% inactivated when exposed to 33 C for 15 min. Mycophenolic acid, homocystine, S-adenosyl-homocysteine, ethanol, and Mg(2+) inhibited the methyltransferase. This enzyme appears to be subject to end product inhibition which may regulate the synthesis of mycophenolic acid. The methyltransferase activity was highest during the early phases of the fermentation.