FK-506 is a macrolide antibiotic with immunosuppressant activity. Structurally, this compound contains three methylated hydroxyl groups at C13, C15 and C31. Previous biosynthetic studies using stable isotope-feeding experiments have established methionine as the source of the methyl for these methylated hydroxyl groups. Based on this information and also the availability of the 31-O-desmethylFK-506, a metabolic precursor for the biosynthesis of FK-506, a S-adenosyl-L-methionine-dependent enzyme assay was developed and the enzyme 31-O-desmethylFK-506 O:methyl-transferase was isolated from an extract of Streptomyces sp. MA 6858 and purified to near homogeneity. 31-O-DesmethylFK-506 O:methyltransferase is a monomeric protein with an apparent molecular mass of 30,000 Da and a pI of 4.4. The first 38 N-terminal amino acids have been sequenced and are H2N-SDVVETLRLPNGATVAHVNAGEAQFLYREIFTDRXYLRH. Functionally, This enzyme has a requirement for Mg2+ with an optimum temperature of 34 degrees C and a pH of 7.4 for full activity. Moreover, it catalyses the methylation of 31-O-desmethylimmunomycin as efficiently as its own natural substrate, 31-O-desmethylFK-506. Additionally, FKMT catalyzes the C31 transmethylation reaction of 13,31-O-bis-desmethyl-, 15,31-O-bisdesmethyl-, 13,15,31-O-trisdesmethyl- and 31-O-19,22-cyclic-hemiketalimmunomycins, which are all structural analogues of FK-506. The reaction is, however, completely blocked if the vicinal hydroxyl which is present at the C-32 position of the 31-O-desmethylFK-506 structure is replaced with azide, phosphate or other substituents. Finally, evidence is presented indicating the close similarity of FKMT and DIMT, a 31-O-desmethyl-immunomycin: O methyltransferase, previously isolated from a cell-free extract of Streptomyces hygroscopicus var ascomyceticus, an immunomycin (ascomycin/FK-520) producer.