Penicillins and cephalosporins are biosynthesized from L-.alpha.-aminoadipic acid, L-cysteine and L-valine. A tripeptide, LLD-$delta$-($alpha$-aminoadipyl)cysteinylvaline(LLD-ACV) was isolated from fermentation broths of Cephalosporium acremonium as well as of Penicillium chrysogenum and it was proved that the LL-$delta$-($alpha$-aminoadipyl cysteine was formed first in mycelia, to which valine would be connected to give LLD-ACV. However, several points are still unsolved; first, what mechanism is involved in the configurational change from L-valine to D-valine, second, what kind of cyclization mechanism gives a $etha$-lactam ring and a thiazolidine ring and third, what is the pathways for the ring expansion from penicillins to cephalosporins. At present, it seems clear that LLD-ACV is cyclized to give isopenicillin N, which is transformed to penicillin N and further to cepbalosporin C. Other hydrophobic penicillins, including benzyl penicillin and penicillin V, are formed from isopenicillin N by acyl-exchange reactions catalyzed by penicillin transferase, rather than by acylation reaction on 6-aminopenicillanic acid(6-APA), which was isolated from the fermentation broth of P. chrysogenum and which would be formed by hydrolysis of $delta-(alpha$-amincadipyl)amido moiety at the C-6 position in isopenicillin N or penicillin N by penicillin acylase. Acylation of 6-APA is catalyzed also by penicillin acylase, but the reaction is proved not to be involved in penicillin biosynthesis. Understanding the biosynthesis of penicillins and cephalsoporins would provide solutions to increase in fermentation yields of penicillins, especially of cephalosporins and a solution to biological production of 7-aminocepbalosporanic acid (7-ACA) which is of importance in pharmaceutical industry. Still regulation mechanisms in penicillin and cephalosporin biosynthesis are unveiled at all.