Deacetoxy/deacetylcephalosporin C synthase (acDAOC/DACS) from Acremonium chrysogenum is a bifunctional enzyme that catalyzes both the ring-expansion of penicillin N to deacetoxycephalosporin C and the hydroxylation of the latter to deacetylcephalosporin C. The R308 residue located in close proximity to the C-terminus of acDAOC/DACS was mutated to the other 19 amino acids. In the resulting mutant pool, R308L, R308I, R308T and R308V showed significant improvement in their ability to convert penicillin analogs, thus confirming the role of R308 in controlling substrate selectivity, the four amino acids all possess short aliphatic sidechains that may improve hydrophobic interactions with the substrates. The mutant R308I showed the highest reactivity for penicillin G, with 3-fold increase in k(cat)/K-m ratio and 7-fold increase in relative activity.