β-lactam antibiotics (e.g. penicillins, cephalosporins) are of major clinical importance and contribute to over 40% of the total antibiotic market. These compounds are produced as secondary metabolites by certain actinomycetes and filamentous fungi (e.g. Penicillium, Aspergillus and Acremonium species). The industrial producer of penicillin is the fungus Penicillium chrysogenum. The enzymes of the penicillin biosynthetic pathway are well characterized and most of them are encoded by genes that are organized in a cluster in the genome. Remarkably, the penicillin biosynthetic pathway is compartmentalized: the initial steps of penicillin biosynthesis are catalyzed by cytosolic enzymes, whereas the two final steps involve peroxisomal enzymes. Here, we describe the biochemical properties of the enzymes of β-lactam biosynthesis in P. chrysogenum and the role of peroxisomes in this process. An overview is given on strain improvement programs via classical mutagenesis and, more recently, genetic engineering, leading to more productive strains. Also, the potential of using heterologous hosts for the development of novel ß-lactam antibiotics and non-ribosomal peptide synthetase-based peptides is discussed.