Strain Rf-107, a mutant of Streptomyces hygroscopicus subsp. aureolacrimosus, obtained with ultraviolet irradiation, produced two new macrolide antibiotics, milbemycins J and K without production of any of the other milbemycins described in the previous paper. Fermentation studies on the strain were conducted in shake flasks and 30-liter jar fermentors. Isolation of the antibiotics was performed by adsorption on resinous adsorbent followed by elution with aqueous MeOH. Purification of milbemycins J and K was completed with Lobar Si 60 column chromatography to give colorless crystals. Physico-chemical data, such as UV, IR and NMR spectra are described. Milbemycins J and K were readily converted by the intact cells of the parent strain to milbemycins alpha 1 and alpha 3, respectively. Physico-chemical characterization and the bioconversion studies revealed that milbemycins J and K were new antibiotics having the 16-membered macrocyclic lactone with a 6,6-membered spiroketal ring system.