Klebsiella pneumoniae strain L 164 produces a penicillinase whose isoelectric point is 8.1, an unusual figure for this bacterial species. This strain exhibits resistance to conventional penicillins and a synergistic effect is seen with clavulanic acid. In contrast, susceptibility to cephalosporins is marked, as shown by the low minimum inhibitory concentrations (MICs). This phenotype is characteristic of strains with no acquired resistance. A first mutant with MICs for cephalothin and cefotaxime 8-fold to 16-fold those of the initial strain was obtained spontaneously. This mutant's MICs for the other beta-lactams were not substantially changed. In addition to the same penicillinase as the one produced by the parent strain, this mutant produced an acetyl-esterase capable of hydrolyzing the cephalosporins with an acetoxyl side-chain, i.e., cefalothin and cefotaxime, to deacetylated derivates which retain substantial antibacterial activity. Another mutant selected on an amoxicillin gradient produced ten times more penicillinase than the parent strain but no esterase. This second mutant exhibited very high MICs for penicillins and first and second generation cephalosporins. The MIC for cefotaxime was comparable to that seen with the esterase-producing mutant. Among the antimicrobials tested, only third generation cephalosporins and cefoxitin showed adequate activity.