Surface-exposed unusual lipids containing phthiocerol and phenolphthiocerol are found only in the cell wall of slow-growing pathogenic mycobacteria and are thought to play important roles in host-pathogen interaction. The enzymology and molecular genetics of biosynthesis of phthiocerol and phenolphthiocerol are unknown. We postulate the domain organization of a set of multifunctional enzymes and a cluster of genes (pps) that would encode these enzymes for the biosynthesis of phthiocerol and phenolphthiocerol. A cosmid containing the postulated pps gene cluster was identified by screening a genomic library of Mycobacterium bovis BCG with the postulated homologous domains from mycocerosic acid synthase and fatty acid synthase genes as probes. Homologous cosmids were also identified in the genomic libraries of Mycobacterium tuberculosis and Mycobacterium leprae. M. bovis BCG was transformed with a pps disruption construct, made from the BCG cosmid by introducing the hygromycin resistance gene as the positive-selectable marker and the sacB gene as the counter-selectable marker. Gene disruption by homologous recombination with double crossover was confirmed by polymerase chain reaction and Southern hybridization. Chromatographic analysis showed that the phenolphthiocerol derivative, mycoside B, and phthiocerol dimycocerosates were not produced by the gene knockout mutants. This result confirms the identity of the pps genes. With the identification of the pps gene clusters in both M. tuberculosis and M. leprae, it should be possible to test the postulated roles of these unique lipids in tuberculosis and leprosy.