By1, a black yeast isolated by Dr. T.W.Flegel, produced three pigmented antibiotic substances other than Y1005. Factors affecting the antibiotics were studied to improve the production of Y1005 the other active substances by BY1. In no instance did media constituents stimulate antibiotic production significantly. However, glucose was selected as the sole carbon source and (NH(,4)(,2)SO(,4),as the sole nitrogen source since it gave equivalent yield to glutamine but was cheaper. Very high C/N ratios were most favourable for production of Y1005 and other pigmented substances. BY1 grew well and produced high amounts of Y 1005 and other pigments when the pH of the culture broth was held at 4 and when the temperature was held at 28 degree C. A purified orange pigment from cellulose columns was crystallized in methylenechloride. From physical data, from comparison to the structure of Y1005 and from possible biosynthetic pathways, this new antibiotic was considered to the 3-hexanoyl-2,5,7-trihydroxy 1,4-naphthoquinone and was proposed to be a precursor of Y1005. Therefore, this new antibiotic was designated Pre Y1005. Both Y1005 and Pre Y1005 were strongly active against Gram-positive bacteria but weakly active against Gram-negative bacteria and fungi. The LD(,50) values of Y1005 and Pre Y1005 and Pre Y1005 were 125 and 165 mg/kg body weight, respectively, when given the i.p. and more than 200 mg/kg body weight when given the i.g.