The production of exfoliative toxin B (ET-B), but not ET-A, was shown to be specifically associated with production of a highly conserved two-component lantibiotic peptide system in phage group II Staphylococcus aureus. Two previously studied but incompletely characterized S. aureus bacteriocins, staphylococcins C55 and BacR1, were found to be members of this lantibiotic system, and considerable homology was also found with the two-component Lactococcus lactis baeteriocin, lacticin 3147. sac alpha A and sac beta A, the structural genes of the lantibiotics staphylococcins C55 alpha and C55 beta and two putative lantibiotic processing genes, sacM1 and sacT, were localized together with the ET-B structural gene to a single 32-kb plasmid in strain C55. In-eversible loss of both ET-B and two-component lantibiotic production occurs during laboratory passage of ET-B-positive S. aureus strains, particularly at elevated temperatures.