1. Bacitracin synthetase, a three-component enzyme complex which catalyzes synthesis of the dodecapeptide bacitracin A, has been prepared from Bacillus licheniformis strains ATCC 10716, AL and SB 319. During synthesis of bacitracin, the amino acids (smaller amounts) and peptides are covalently bound to the enzyme complex. The nature of the bindings suggest that the amino acids and peptides are thioester linked. 2. The peptides, identified by thin-layer chromatography after performic acid liberation were Ile-Cys, Ile-Cys-Leu, Ile-Cys-Leu-Glu, Ile-Cys-Leu-Glu, Ile-Cys-Leu-Glu-Ile, Ile-Cys-Leu-Glu-Ile-Lys-Orn, Ile-Cys-Leu-Glu-Ile-Ile-Orn-Ile, Ile-Cys-L-EU-Glu-Ile-Lys-Orn-Ile-Phe, Ile-Cys-Leu-Glu-Ile-L-YS-Orn-Ile-Phe-His-Phe-His and Ile-Cys-Leu-Glu-Ile-Lys-Orn-Ile-Phe-His-Asp. 3. The labelled peptides covalently bound to bacitracin synthetase were intermediates in bacitracin synthesis. 4. Chain growth is initiated on one enzyme component (A) by the addition of isoleucine and cysteine. The sequential addition of the other amino acids proceeds in the C-terminal direction until the pentapeptide is formed. Further addition of amino acids and production of bacitracin are obtained by adding the other enzyme components (B and C) to the incubation mixture.