A novel Streptomyces strain, L10, which is capable of producing natamycin, was isolated from a soil sample collected from Zhejiang province, China. On the basis of phylogenetic analysis of rpoB gene and 16S rDNA sequences, as well as phenotypic comparison, strain L10 (CGMCC 2644) is proposed to be a previously uncharacterized strain of S. chattanoogensis. By screening a cosmid library of strain L10 and primer walking, a partial sequence of scnRl and the entire sequence of scnRlI were obtained, which are orthologues to the pathway-specific positive regulator genes of natamycin biosynthesis in S. natalensis. The engineered S. chattanoogensis D1, generated by inserting an additional copy of scnRII into the chromosome of strain L10, increased its natamycin production by 3.3 fold in YSG medium and 4.6 fold in YEME medium without sucrose.