A study has been made of the conditions affecting production of griseofulvin by Penicillium nigricans in two types of soil, an acid, sandy podsol from Wareham Heath and a garden soil. The characteristic morphogenetic response of many fungi to low concentrations of griseofulvin was made the basis of a highly specific bioassay. The essential prerequisites for production of griseofulvin in either soil were sterilization and enrichment with organic matter; no griseofulvin could be detected in autoclaved soil which had not been supplemented or in normal soil even when organically enriched. Garden soil was a better medium for growth of P. nigricans and production of griseofulvin than Wareham soil although this soil could be improved in this respect by liming. The yield of griseofulvin was decreased in soil re-infected by other soil organisms, particularly by some which were known to produce antifungal antibiotics, e. g. Penicillium expansum, P. frequentans and two strains of Trichoderma viride. The antagonism shown to Penicillium nigricuns was not entirely a matter of antibiotic activity, as some fungi believed not to produce antifungal substances had an antagonistic effect. These were mostly fungi with a characteristically rapid growth rate, e. g. Mucor rammannianus and one strain of Trichoderma viride. In some cases Penicillium nigricans was itself antagonistic to other fungi irrespective of their ability to produce antibiotics or of their fast-growing habit. The results were compared with those obtained from a previous study of the soil conditions affecting the production of gliotoxin by Trichoderma viride. A higher level of nutrient was required for the production of griseofulvin, and the effect of antagonism by other soil micro-organisms was more important than in the production of gliotoxin by T. viride in the soil.