The avermectin (Av) polyketide synthase (PKS) and erythromycin (Er) PKS are encoded by modular repeats of DNA, but the genetic organization of the modules encoding Av PKS is more complex than Er PKS. Sequencing of several related DNA fragments from Streptomyces avermitilis that are part of the Av biosynthetic gene cluster, revealed that they encode parts of large multifunctional PKS proteins. The Av PKS proteins show strong similarity to each other, as well as similarity to Er PKS proteins [Donadio et al., Science 252 (1991) 675-679] and fatty acid synthases. Partial DNA sequencing of the 65-kb region containing all the related sequence elements in the avr genes provides evidence for twelve modular repeats encoding FAS-like domains. The genes encoding the Av PKS are organized as two sets of six modular repeats which are convergently transcribed.