The rate of microbiological ring-expansion of penicillin N to deacetoxycephalosporin C using protoplast lysates of the antibiotic-negative mutant Cephalosporium acremonium M-0198 has been increased some 70-fold over that of our earlier system. We confirmed the stimulatory effects of FeSO₄ and ascorbate described by HOOKet al. (Biochem. Biophys. Res. Commun. 87: 258, 1979); the optimum concentrations found were 0.04 mM FeSO₄ and 0.67 mM ascorbate. Adenosine triphosphate concentration was lowered to 0.83 mM; phosphoenolpyruvate and pyruvate kinase were eliminated. The optimum pH and temperature for the reaction were 7.2 and 25°C, respectively. α-Ketoglutarate and MnCl₂ showed no marked effect on the reaction, MgSO₄ and KCl were mildly stimulatory, and CUSO₄ and ZnSO₄ were very inhibitory. Penicillin N was optimal at a concentration of 0.07 mM. Specific ring-expansion activity reached its peak 13 hours after growth ceased and then disappeared rapidly.