The cyclic undecapeptide cyclosporin A (CyA), one of the most valuable immunosuppressive drugs, is produced nonribosomally by a multifunctional cyclosporin synthetase enzyme complex by the filamentous fungus Tolypocladium niveum. To increase CyA productivity by wild-type T. niveum (ATCC 34921), random mutagenesis was first performed using an antifungal agar-plug colony assay (APCA) selection approach. This generated a mutant strain producing more than 9-fold greater CyA than the wild-type strain. Additionally, a foreign bacterial gene, Vitreoscilla hemoglobin gene (VHb), was transformed via protoplast regeneration and its transcription was confirmed by RT-PCR in the UV-irradiated mutant cell. This led to an additional 33.5% increase of CyA production. Although most protoplast-regenerated T. niveum transformants tend to lose CyA productivity, the optimized combination of random mutagenesis and protoplast transformation described here should be an efficient strategy to generate a commercially valuable, yet metabolite low-producing, fungal species, such as CyA-producing T. niveum.