A methyltransferase, which utilizes 3-hydroxyanthranilic acid (HAA) as a substrate, has been purified to near homogeneity from 30-36-h mycelium of the bacterium Streptomyces antibioticus. The enzyme was obtained in approximately 20% yield with a purification of 130-fold. Polyacrylamide gel electrophoresis under denaturing conditions indicates that the enzyme is composed of a single subunit with Mr of about 36,000. On chromatography in 0.5 M NaCl, the enzyme displays a molecular weight of about 37,000. The specific activity of the enzyme in S. antibioticus mycelium is maximal between 30 and 36 h following inoculation of galactose/glutamic acid medium and, at those times post-inoculation, the specific activity is essentially the same in extracts of mycelium obtained from cultures grown on glucose rather than galactose as the carbon source. The enzyme activity is stimulated by Na2EDTA (in crude extracts) and by 2-mercaptoethanol and the methyltransferase shows a strong preference for HAA as substrate as compared with a number of HAA analogs. Thin layer chromatography of ethyl acetate extracts of large-scale incubation mixtures confirms that the product of the reaction is 4-methyl-3-hydroxyanthranilic acid. The reaction product was also a substrate for phenoxazinone synthase and was incorporated into actinomycin by S. antibioticus mycelium. Kinetic parameters for the methyltransferase reaction was determined.