1. Three intracellular peptides found in small amount in a Cephalosporium sp. were rapidly labelled when dl-[14C]valine was added to a shaken suspension of the organism. More 14C was incorporated into peptide P3, δ-(l-α-aminoadipyl)-l-cysteinyl-d-valine, than into peptide P2 (containing α-aminoadipic acid, cysteine, valine and glycine) or peptide P1 (containing β-hydroxyvaline in place of the valine in peptide P2). 2. Peptides P3 and P2, but not peptide P1 were formed in a broken-cell system from the Cephalosporium sp. in the presence of δ-(l-α-aminoadipyl)-l-cysteine and dl-[14C]valine. No synthesis was observed in the presence of δ-(d-α-aminoadipyl)-l-cysteine or of dl-α-amino[14C]adipic acid and l-cysteinyl-l-valine or l-cysteinyl-d-valine. 3. The biosynthesis of these peptides was catalysed by the particulate fraction of the broken-cell system, whereas that of glutathione was catalysed by the supernatant fraction. 4. These results are discussed in relation to penicillin N and cephalosporin C biosynthesis.