Bacillus subtilis AU195 produces bacillomycin D, a cyclic lipopeptide that is an inhibitor of the aflatoxin producing fungus Aspergillus flavus. Sequence analysis of the bacillomycin D operon revealed four ORFs with the structural organization of the peptide synthetases. Disruption of ORF 2, which links the amino acid moiety to the b-amino fatty acid, resulted in the loss of antifungal activity. By comparing the sequence of bacillomycin D, iturin A and mycosubtilin operons, our results showed that intergenic module replacement have occurred between B. subtilis lipopeptide synthetases including the iturin family and the plipastatin and fengycin family.