The tripeptide delta-(L-alpha-aminoadipyl)-L-cysteinyl-D-valine, an intermediate in the penicillin biosynthetic pathway, is converted to isopenicillin N by isopenicillin N synthetase (cyclase) of Penicillium chrysogenum. The cyclization required dithiothreitol and was stimulated by ferrous ions and ascorbate. Co2+ and Mn2+ completely inhibited enzyme activity. Optimal temperature and pH were 25 degrees C and 7.8, respectively. The reaction required O2 and was stimulated by increasing the dissolved oxygen concentration of the reaction mixture. Purification of the enzyme to a single major band in polyacrylamide gel electrophoresis was achieved by protamine sulfate precipitation, ammonium sulfate fractionation (50 to 80% of saturation), DEAE-Sephacel chromatography, and gel filtration on Sephacryl S-200. The estimated molecular weight was 39,000 +/- 1,000. The apparent Km of isopenicillin N synthetase for delta-(L-alpha-aminoadipyl)-L-cysteinyl-D-valine was 0.13 mM. The enzyme activity was strongly inhibited by glutathione, which acts as a competitive inhibitor. A good correlation was observed between the isopenicillin N synthetase activity in extracts of four different strains of P. chrysogenum (with widely different penicillin-producing capability) and the amount of penicillin production by these strains.