The effect of carbon sources on tacrolimus production by a mutant strain of Streptomyces clavuligerus CKD 1119, an isolate from soil, was examined. Among the carbohydrates and oils tested in this work, a mixed carbon source of soluble starch and com oil was the best. An analysis of the culture kinetics also showed that, in contrast to the carbohydrates, the com oil was consumed later in the antibiotic production phase, implying that the oil substrate was the principal carbon source for the biosynthesis of tacrolimus, and this was directly proven by experiments using $^{14}C$-glucose and $^{14}C$-oleate substrates. Furthermore, com oil induced the formation of lipase by the mutant strain, whereas the addition of glucose significantly repressed lipase activity. The lipase activity exhibited by the FK-506-overproducing mutants was also observed to be directly proportional to their tacrolimus yield, indicating that a high lipase activity is itself a crucial factor for tacrolimus production. A feasibility study with a 200-1 pilot-scale fermentor and the best strain (Tc-XII-15322) identified in this work revealed a high volumetric and specific productivity of about 495 mg/l and 0.34 mg/mg dry mycelium, respectively.