FK520, also called ascomycin, is an immunosuppressive agent produced by Streptomyces hygroscopicus. Engineering the polyketide synthase genes of the parent strain generated novel FK520 analogs with the potential for improved in vivo stability. By replacing the acyl transferase (AT) domain in the polyketide synthase module 8 with an AT specific for methylmalonyl CoA (the rapamycin AT 3), the strain produced 13-desmethoxy-13-methyl-FK520 (13dmmFK520). Process development and scale-up studies of this recombinant S. hygroscopicus strain producing 13dmmFK520 are described here. Production kinetics and compound stability in fermentation broth were significantly different compared to the native FK520. Fermentation of the new strain resulted in the synthesis of a contaminating substance that co-purified with the 13dmmFK520. To optimize 13dmmFK520 production and to facilitate purification, growth parameters and media development were examined. Although a medium was identified that increased product titers by ca. 300%, the ratio of impurity to product was doubled. Lower dissolved oxygen (20% compared to 50% and 80%) increased titers by 20% with no appreciable effect on the concentration of impurity. Increasing the fermentation pH from 6.0 to 6.5 did not change the 13dmmFK520 titer, but reduced the impurity-to-product ratio by approximately 450%.