The mechanism conferring resistance to paromomycin in Streptomyces rimosus forma paromomycinus, the producing organism, was studied at the level of both protein synthesis and drug-inactivating enzymes. Ribosomes prepared from this organism grown in either production or nonproduction medium were fully sensitive to paromomycin. A paromomycin acetyltransferase and a paromomycin phosphotransferase, both characteristic of the producer, were highly purified from extracts prepared from two Streptomyces lividans transformants harboring the relevant genes inserted in pIJ702-derived plasmids. In vitro, paromomycin was inactivated by either activity. In vivo, however, S. lividans clones containing the gene for either enzyme inserted in the low-copy-number plasmid pIJ41 were resistant to only low levels of paromomycin. In contrast, an S. lividans transformant containing both genes inserted in the same pIJ41-derived plasmid displayed high levels of resistance to paromomycin. These results indicate that both genes are required to determine the high levels of resistance to this drug in the producing organism. Paromomycin is doubly modified by the enzymes. However, whereas acetylparomomycin was a poorer substrate than paromomycin for the phosphotransferase, phosphorylparomomycin was modified more actively than was the intact drug by the acetyltransferase. These findings are discussed in terms of both a permeability barrier to paromomycin and the possible role(s) of the two enzymes in the biosynthetic pathway of this antibiotic.