Inactivation of antitumor antibiotic, Neocarzinostatin, which occurs in vivo or during incubation with serum in a test tube, was found to depend on the dose of serum and incubation period. The inactivation process was accompanied with degradation of Neocarzinostatin to a smaller molecular size with concomitant loss in antigenic activities at a slower rate. Apparent increase, close to about 250% of control, in the antibiotic activity was found before the inactivation, in the presence of diisopropyl fluorophosphate, or about 200% in the presence of N-ethylmaleimide. The present findings suggest that the degradation process partly depends on proteolysis by serine type proteinase(s) and partly on the involvement of sulfhydryl groups. These results imply two possible applications; one for chemotherapy with Neocarzinostatin in combination with inhibitors of proteolysis and the other for drug design through the modification of amino acid residues on Neocarzinostatin molecules which provide the enzyme binding sites such as lysine and arginine for the proteolytic catalysis.