Streptomyces clavuligerus is a potent producer of penicillin and cephalosporin antibiotics. A key step in the biosynthesis of these β-lactam compounds is the cyclization of the thiol tripeptide δ-(L-α-aminoadipyl)- L-cysteinyl-D-valine (ACV) to isopenicillin N by the enzyme isopenicillin N synthase (IPNS). However, bis-ACV, the oxidized disulfide form of the tripeptide, is not a substrate for IPNS. We show here that S. clavuligerus possesses an NADPH-dependent disulfide reductase of broad substrate specificity that efficiently catalyzes the reduction of disulfide bonds in bis-ACV and in other low-molecular-weight disulfide containing compounds and proteins. The disulfide reductase comprises two protein components, a 70-kDa reductase consisting of two identical subunits, and a 12-kDa heat-stable protein reductant. The structural and functional properties of the disulfide reductase resemble those of the thioredoxin class of oxidoreductases. When the disulfide reductase system is coupled with IPNS, it quantitatively converts bis-ACV to isopenicillin N. These findings suggest that the disulfide reductase may play a role in the biosynthesis of penicillins and cephalosporins in streptomycetes. We also show here that S. clavuligerus lacks glutathione reductase and have previously reported that Streptomyces species do not contain glutathione. This disulfide reductase may therefore be important in determining the thiol-disulfide redox balance in streptomycetes.