Lactoquinomycin, a novel basic antibiotic, was isolated from the culture broth of a soil streptomyces by repeated solvent extraction and adsorption column chromatography. Morphological, cultural and physiological studies revealed that the organism belongs to the species Streptomyces tanashiensis. The antibiotic was active against bacteria, particularly Gram-positive organisms, and neoplastic cells in vitro. Antibiotic-resistant cell sublines of L5178Y lymphoblastoma were more significantly inhibited by lactoquinomycin than the parental cell line. Lactoquinomycin was effective against Ehrlich carcinoma in mice.