Biochemical studies on a new antitumor antibiotic, CI-920, have been directed toward understanding its mode of action. The most striking effect brought on by CI-920 was a marked inhibition of macromolecular synthesis. L1210 leukemia cells exposed to 10 microM CI-920 exhibited a decreased rate of DNA, RNA, and protein synthesis within 45 min, and maximal inhibition occurred within 60 min. The reduction in nucleic acid synthesis was not due to precursor depletion, since ribonucleoside and deoxyribonucleoside triphosphate levels in cells exposed to 10 microM CI-920 for 2 h either remained unchanged relative to control cells or were elevated, suggesting a block more directly at the level of nucleotide incorporation. Nevertheless, CI-920 (50 microM) had no effect on DNA or RNA polymerase activity as assessed in permeabilized L1210 cells. However, if viable cells were exposed to 20 microM CI-920 for 1 h prior to permeabilization and then the polymerases assayed in the absence of drug, there was a 60% depression in enzyme activity. The inhibition of RNA polymerase appears to result from an effect on the enzyme rather than the template, since inhibition of RNA polymerase activity in cell-free systems from drug-treated cells could not be restored by addition of excess DNA template. DNA polymerase, however, was at least partially restored by addition of template and therefore was inconclusive in this respect. The data, then, suggest that CI-920 inhibits nucleic acid synthesis directly at the level of nucleotide incorporation, either by direct inhibition of DNA or RNA polymerase or by inactivation of an essential component of these enzyme systems. Since the drug in its parent form did not inhibit nucleic acid synthesis in cell-free systems the effects may possibly be mediated through conversion of this agent to another chemical form within viable cells.