Penicillin acylase (PA) is an industrial enzyme that is used to convert penicillin G into a precursor for semisynthetic penicillins. We have cloned a segment of DNA that codes for the two subunits required for PA activity. We also report the nucleotide sequence of a DNA fragment that codes for (i) the small subunit, (ii) the N-terminal region of the large subunit and (iii) a putative connecting peptide. These results confirm the existence of a common precursor for both peptides.