A high level of ML-236B productivity was obtained in a mechanically agitated aerobic culture of Penicillium citrinum when small pellets were formed. Size and concentration of pellet for production had to be optimized. In contrast, cultures with filamentous growth exhibited high viscosities and pseudoplastic flow behavior. Since the oxygen transfer coefficient decreased with increasing viscosity, such cultures became oxygen-limited and resulted in low product yield. In a large scale fermentation process, several preculture steps are required. Factors influencing pellet formation under such conditions were investigated. The mean diameters of pellets increased and their number decreased as preculturing was repeated. However, after more than three precultures, many small pellets reappeared. These small pellets were thought to be formed by the agglomeration of free mycelia which were derived from the original pellets. The number of free mycelia formed during preculturing depended upon the characteristics of the strain as well as the culture conditions. Strains which produced soft pellets (low density) tended to form more free mycelia than did strains which produced tight pellets (high density). It is believed that both the number and size of the pellets in the production culture could be regulated by changing the number of free mycelia which were transferred to the production culture from the preculture.