A cell-free extract from the thienamycin producer,Streptomyces cattleya, has been found to deacetylate the co-product,N-acetylthienamycin. The pH optimum of the reaction is 7.5. Due to the lability ofN-acetylthienamycin, we used thed andl forms of the synthetic substrateN-chloroacetylvaline. We found that the enzyme is anl-deacetylase, has a molecular weight of 58 000, is stable up to 40°C, acts optimally at 45°C, is stable at pH 5–8, is not activated by divalent metal ions and is inhibited by Hg++, Cu++ andp-chloromercuribenzoate. This is the first report of an extract from a carbapenem producer which carries out the deacetylation ofN-acetylthienamycin, suggesting that the acetylated derivative is a precursor of thienamycin.