Medium composition and cultivation conditions were constructed for the optimum production of leupeptin by Streptomyces exfoliatus SMF13. The production of leupeptin was related to mycelial growth, being optimum in the cultivation with glucose-excess, phosphate-limited, and casamino acids medium. However, leupeptin-inactivating enzyme (LIE) was produced in the cultivation with glucose-limited, phosphate-excess, and Na-caseinate medium where mycelium degradation was accompanied. LIE was one of the most important factors in optimizing the leupeptin productivity. Kinetic parameters calculated from batch and chemostat cultivations revealed that qlpt was closely related to qs and mu, but qLIE was increased after mu declined to near zero, and followed by kd. Optimum production process of leupeptin was determined with phosphate-limited continuous cultivation, which did not permit LIE production. The maximum productivity (0.24 g l-1 h-1) and production yield (1.64 g leupeptin per g glucose) of phosphate-limited chemostat cultivation were 2.4- and 4-times larger than those of batch cultivation, respectively. This is the first cultivation kinetic analysis for leupeptin production and its inactivation by LIE in relation to mycelium differentiation.