A cell-free system which catalyzed polyuridylate-directed incorporation of (U-14C) L-phenylalanine into polyphenylalanine was obtained from Streptomyces species 3022a and shown to be sensitive to chloramphenicol (CAP). Ribosomes from the CAP-producing actinomycete were of the 70-S variety and bound the antibiotic to the same extent as ribosomes from a sensitive strain of Escherichia coli. Chloramphenicol also inhibited protein synthesis in growing cultures of Streptomyces species 3022a. The degree of inhibition was greater in non-producing than in producing cultures. In producing cultures protein synthesis was inhibited only during the early growth phase when little endogenous antibiotic had been formed. The response correlated with the sensitivity of the organism to added CAP under various growth conditions. During the lag while antibiotic resistance was developing (U-14C) L-leucine was very slowly taken up by the mycelium but no protein was synthesized. Resumption of growth was accompanied by incorporation of radioactivity into protein, but no distinctive protein could be detected when cells in the recovery phase were fractionated. Development of resistance to CAP by Streptomyces species 3022a was reversible, and was graded to the concentration to which the cells were exposed. The results suggest that permeability changes induced by CAP which has entered or been biosynthesized by the cell play an important role.