FR900840 [2S)-2-amino-2-carboxyethyl (3R)-2-diazo-3-hydroxybutyrate), a new antibiotic with antitumor activity was isolated from the fermentation broth of Streptomyces sp. No. 8727. Its antitumor activity was examined in three mouse tumor systems and ten human tumor systems. FR900840 had no clear effect on mouse ascitic tumors, P388 and L1210, and the B16 melanoma line, but had prominent antitumor effects on several human solid tumors. Its antitumor activity against A549 human lung adenocarcinoma was stronger than those of vinblastine, doxorubicin and cisplatin. These results suggest that FR900840 may become a useful prototype antitumor drug.