The present work aimed to improve the production of penicillin G acylase (PGA) and reduce the beta-lactamase activity through acridine orange (AO) induced mutation in Escherichia coli. Three wild E. coli strains BDCS-N-FMu10, BDCS-N-S21 and BDCS-N-W50, producing both the enzymes PGA and beta-lactamase were treated by AO. Minimum inhibitory concentration of AO was 10 microg ml(-1) and it was noted that bacterial growth was gradually suppressed by increasing the concentration of AO from 10 to 100 microg ml(-1). The highest concentration that gave permissible growth rate was 50 microg ml(-1). The isolated survivals were screened on the bases of PGA and beta-lactamase activities. Among the retained mutants, the occurrence of beta-lactamase deficient ones (91%) was significantly higher than penicillin acylase deficient ones (27%). In seven of the mutants, PGA activity was enhanced with considerable decrease in beta-lactamase activity. One of the mutant strains (BDCS-N-M36) exhibited very negligible expression of beta-lactamase activity and twofold increase in PGA activity [12.7 mg 6-amino-penicillanic acid (6-APA) h(-1) mg(-1) wet cells] compared with that in the wild-type strain (6.3 mg 6-APA h(-1) mg(-1) wet cells). The treatment of E. coli cells with AO resulted in mutants with enhanced production of PGA and inactivation of beta-lactamase. These mutants could be used for industrial production of PGA.