It has been shown that eleven strains of E. coli, which are antagonistic in the living state against a Shigella parcdysenterice Flexner type III, are capable of producing antibiotic when grown on the surface of agar media. Little or no antibiotic developed under various conditions of broth culture. Four strains of E. coli, non-antagonistic in the living state were not capable of producing antibiotic under similar conditions. It has been possible to obtain moderate yields of antibiotic with several strains on a simple synthetic medium. The presence of as much as 25 per cent human serum does not interfere with the action of the antibiotics tested. The properties of the antibiotic of one strain, E. coli 534, have been studied in some detail. They are very similar to those of the substance described by Heatley and Florey (1).