Avermectin is an important macrocyclic polyketide produced by Streptomyces avermitilis and widely used as an anthelmintic agent in the medical, veterinary, and agricultural fields. The avermectin biosynthetic gene cluster contains aveR, which belongs to the LAL-family of regulatory genes. In this study, aveR was inactivated by gene replacement in the chromosome of S. avermitilis, resulting in the complete loss of avermectin production. The aveR mutant was unable to convert an avermectin intermediate to any avermectin derivatives, and complementation by intact aveR and its proper upstream region restored avermectin production in the mutant, suggesting that AveR is a positive regulator controlling the expression of both polyketide biosynthetic genes and postpolyketide modification genes in avermectin biosynthesis. Despite the general concept that an increased amount of a positive pathway-specific regulator leads to higher production, a higher amount of aveR resulted in complete loss of avermectin, indicating that there is a maximum threshold concentration of aveR for the production of avermectin.