BACKGROUND: Streptomyces filipinensis is the industrial producer of filipin, a pentaene macrolide, archetype of non-glycosylated polyenes, and widely used for the detection and the quantitation of cholesterol in biological membranes and as a tool for the diagnosis of Niemann-Pick type C disease. Genetic manipulations of polyene biosynthetic pathways have proven useful for the discovery of products with improved properties. Here, we describe the late biosynthetic steps for filipin III biosynthesis and strategies for the generation of bioactive filipin III derivatives at high yield. RESULTS: A region of 13,778 base pairs of DNA from the S. filipinensis genome was isolated, sequenced, and characterized. Nine complete genes and two truncated ORFs were located. Disruption of genes proved that this genomic region is part of the biosynthetic cluster for the 28-membered ring of the polyene macrolide filipin. This set of genes includes two cytochrome P450 monooxygenase encoding genes, filC and filD, which are proposed to catalyse specific hydroxylations of the macrolide ring at C26 and C1' respectively. Gene deletion and complementation experiments provided evidence for their role during filipin III biosynthesis. Filipin III derivatives were accumulated by the recombinant mutants at high yield. These have been characterized by mass spectrometry and nuclear magnetic resonance following high-performance liquid chromatography purification thus revealing the post-polyketide steps during polyene biosynthesis. Two alternative routes lead to the formation of filipin III from the initial product of polyketide synthase chain assembly and cyclization filipin I, one trough filipin II, and the other one trough 1'-hydroxyfilipin I, all filipin III intermediates being biologically active. Moreover, minimal inhibitory concentration values against Candida utilis and Saccharomyces cerevisiae were obtained for all filipin derivatives, finding that 1'-hydroxyfilipin and especially filipin II show remarkably enhanced antifungal bioactivity. Complete nuclear magnetic resonance assignments have been obtained for the first time for 1'-hydroxyfilipin I. CONCLUSIONS: This report reveals the existence of two alternative routes for filipin III formation and opens new possibilities for the generation of biologically active filipin derivatives at high yield and with improved properties.