Milbemycins A3/A4 are important 16-membered macrolides which have been commercialized and widely used as pesticide and veterinary medicine. However, similar to other milbemycin producers, the production of milbemycins A3/A4 in Streptomyces bingchenggensis is usually accompanied with undesired by-products such as C5-O-methylmilbemycins B2/B3 (alpha-class) and beta 1/beta 2 (beta-class) together with nanchangmycin. In order to obtain high yield milbemycins A3/A4-producing strains that produce milbemycins A3/A4 as main components, milD, a putative C5-O-methyltransferase gene of S. bingchenggensis, was biofunctionally investigated by heterologous expression in Escherichia coli. Enzymatic analysis indicated that MilD can catalyze both alpha-class (A3/A4) and beta-class milbemycins (beta 11) into C5-O-methylmilbemycins B2/B3 and beta 1, respectively, suggesting little effect of furan ring formed between C6 and C8a on the C5-O-methylation catalyzed by MilD. Deletion of milD gene resulted in the elimination of C5-O-methylmilbemycins B2/B3 and beta 1/beta 2 together with an increased yield of milbemycins A3/A4 in disruption strain BCJ13. Further disruption of the gene nanLD encoding loading module of polyketide synthase responsible for the biosynthesis of nanchangmycin led to strain BCJ36 that abolished the production of nanchangmycin. Importantly, mutant strain BCJ36 (a dagger milDa dagger nanLD) produced milbemycins A3/A4 as main secondary metabolites with a yield of 2312 +/- 47 mu g/ml, which was approximately 74 % higher than that of the initial strain S. bingchenggensis BC-109-6 (1326 +/- 37 mu g/ml).