The in vitro conversion of penicillin N analogues to cephalosporins was first demonstrated in resting cells and cell-free extracts of Streptomyces clavuligerus NP1. This study has optimized the conversion rate of a highly expressed soluble source of recombinant S. clavuligerus NRRL 3585 deacetoxycepalosporin C synthase (scDAOCS) through detailed characterization of its cofactor requirements. Inclusion of dithiothreitol (DT-F) and ascorbate at various concentrations from 0.2-16 mM and 0.2-10 mM was found to be inhibitory to scDAOCS activity under specified reaction conditions examined. Simultaneous omission of these cofactors in a new modified reaction condition. comprising of 50 mM Tris HCl (pH7.4), 0.8 mM ATP, 1.28 mM alpha -ketoglutarate and 1.8 mM FeSO4, enhanced the conversion rate of two penicillin N analogues. penicillin G and ampicillin, through 20- and 35-fold respectively.