Natural non-antibiotic producing Streptomyces sp. 1254 was mutagenized by UV irradiation and two active mutants were isolated. Mutant 113 produced novel anthracycline compounds designated mutactimycins. Mutactimycin A was active against the bacteriophage of Bac. subtilis and some viruses in tissue culture. The mutant 2-6 synthesized a basic water-soluble antimicrobial antibiotic. Chemical analysis of the whole cell hydrolysate and the morphological characterization showed that the strain 1254 and its mutant 2-6 were of chemotype I, belonging to the genus of Streptomyces, and the mutant 113 was of chemotype IV without mycolic acid. Co-synthesis test of strain 1254 and a blocked mutant of strain 113 gave the active compounds identical with mutactimycins. Using the actI gene as a probe, the Southern hybridization revealed homology between the actinorhodin polyketide biosynthase gene and the total DNA of the strain 1254. Based on these data it was deduced that Streptomyces sp. 1254 should have a biosynthesis pathway for mutactimycin, but some of its genes might fail in expression and mutagenesis would make the silent gene(s) active.