A process for the production of a novel antibiotic butalactin of the formula shown in Fig.1 of the drawings accompanying the provisional specification from a new strain of Streptomyces species culture no.HIL Y-86,36923 or its variants or mutants consisting of cultivating the said strain by fermentation at 18-40 degree C and pH between 6.0 to 9.0 under aerobic conditions in an aqueous nutrient medium as herein described and isolating the butalactin from the culture both in a known manner.