The Aspergillus nidulans velvet (veA) gene encodes a global regulator of gene expression controlling sexual development as well as secondary metabolism. We have identified the veA homologue AcveA from Acremonium chrysogenum, the major producer of the beta-lactam antibiotic cephalosporin C. Two different disruption strains as well as the corresponding complements were generated as a prelude to detailed functional analysis. Northern hybridization and quantitative real-time PCR clearly indicate that the nucleus-localized AcVEA polypeptide controls the transcriptional expression of six cephalosporin C biosynthesis genes. The most drastic reduction in expression is seen for cefEF, encoding the deacetoxycephalosporine/deacetylcephalosporine synthetase. After 120 h of growth, the cefEF transcript level is below 15% in both disruption strains compared to the wild type. These transcriptional expression data are consistent with results from a comparative and time-dependent high-performance liquid chromatography analysis of cephalosporin C production. Compared to the recipient, both disruption strains have a cephalosporin C titer that is reduced by 80%. In addition to its role in cephalosporin C biosynthesis, AcveA is involved in the developmentally dependent hyphal fragmentation. In both disruption strains, hyphal fragmentation is already observed after 48 h of growth, whereas in the recipient strain, arthrospores are not even detected before 96 h of growth. Finally, the two mutant strains show hyperbranching of hyphal tips on osmotically nonstabilized media. Our findings will be significant for biotechnical processes that require a defined stage of cellular differentiation for optimal production of secondary metabolites.