Ceftazidime-resistant Klebsiella pneumoniae strains began to appear when ceftazidime usage was increased in two unrelated Chicago hospitals. These strains produced a beta-lactamase with an isoelectric point of 5.6 (RP-5.6) and strong hydrolyzing activity against ceftazidime. Two different restriction digest profiles were associated with the ceftazidime resistance plasmids. A second beta-lactamase with a pI of 5.2 (RP-5.2) was coproduced in two representative strains. The second beta-lactamase hydrolyzed ceftazidime, cefotaxime, and aztreonam with relative hydrolysis rates of < 8% of that observed for benzylpenicillin. Both enzymes were inhibited by clavulanic acid and tazobactam. Nucleotide sequencing of the genes coding for RP-5.2 and RP-5.6 revealed sequences identical to those of the TEM-12 and TEM-10 beta-lactamase genes, respectively. Both genes were derived from a TEM-1 sequence related to that of the gene encoded on the Tn2 transposon. Single point mutations are required to progress from TEM-1 to TEM-12 and from TEM-12 to TEM-10. Extracts from broths grown from single cell isolates of the strain producing TEM-12 and TEM-10 were shown to contain both enzymes. Transconjugants producing either the TEM-12 or the TEM-10 beta-lactamase were obtained. A significant finding was that both enzymes were encoded by plasmids with identical restriction digest patterns. These studies show that mutations leading to extended-spectrum beta-lactamases can occur sequentially in the same organism, with the genes encoding both enzymes maintained stably.