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Summary: The penicillin-binding component (PBC) of Staphylococcus aureus is rapidly inactivated by acid but is more stable at neutral or alkaline pH values. At 2° various preparations lost 25–50% activity overnight at the optimum pH. Cell-free preparations of PBC (penicillin-binding cell walls or ‘lipid particles’) showed an initial increase in the amount of PBC available to penicillin. PBC was heat-labile, being completely destroyed by 5 min. at 50°. The final amount of penicillin bound did not vary over the range pH 4·4–7·6, but the rate of binding was somewhat greater at the lower end of this range. No separation of PBC from lipid particles was achieved by several mild techniques. Organic solvents which did not remove lipid material from intact cells also failed to affect PBC; more drastic solvent procedures which were effective in removing lipid appeared to destroy PBC. Intact cells or lipid particles from a penicillin-resistant yeast did not bind penicillin.