The application of a two-phase fermentation system for the production of ergot peptide alkaloids by Claviceps purpurea is described. Perfluorocarbons (PFC) are used as oxygen vectors in Claviceps fermentation for the first time. In shake-flask cultivations, the inclusion of PFC in the medium brings about a five-fold increase in the total alkaloid production and a six-fold increase in the pharmaceutically important component, ergotamine. This rise cannot be correlated with the concentration of the added PFC and it is thought that the enhancement is due to a combination of factors, including the influence of PFC. Other oxygen vectors, such as several hydrocarbons, prove to be poor oxygen carriers in our study. Cultivations with PFC in a bioreactor are reproducible, the maximum total alkaloid and ergotamine production being attained on the 11th and 9th days, respectively. The relatively lower increase in the total alkaloid production in the bioreactor as compared to the shake-flasks is attributed to the unequal oxygen avail ability in the reactor. Processes with PFC offer the operational advantage of a five-fold reduction in aeration rate.