C-1027 is a new antitumor protein antibiotic containing a non-protein chromophore. The active moiety and the mechanism of action of this antibiotic were studied. C-1027 and its chromophore inhibited the growth of KB carcinoma and L1210 leukemia cells, even at extremely low concentrations. C-1027 inhibited DNA synthesis of L1210 cells and cleaved cellular DNA in a drug concentration-dependent manner. C-1027 and chromophore caused directly DNA single strand breaks in the purified DNA without any supplement of reducing agents. These results suggest that C-1027 chromophore may inhibit cell growth by causing DNA breakage with subsequent inhibition of DNA synthesis.