The application of directed selection techniques and genetic engineering methods for manipulation of antibiotic-producing microorganisms is generating a new era in industrial microbiology. Modern methods, based on advances in the knowledge of the biosynthetic pathways and regulatory mechanisms involved in the induction and repression of genes involved in antibiotic synthesis, provide a means of increasing antibiotic activity. Hence, recombinant DNA and protoplast fusion methods are used to alter the genetics of antibiotic producers in a semirandom fashion for the development of novel hybrid antibiotics. Directed mutation and selection, protoplast fusion, and both semirandom and specific recombinant DNA methods are examples of alternative procedures for manipulating the biosynthetic pathways of microorganisms for strain improvement and for new hybrid antibiotic synthesis.