Higher yielding cephalosporin C (CPC) producing mutant strains were selected after U.V., nystatin and camphor mutagenesis of Cephalosporium acremonium ATCC 20339 which produced about 500 $\mu$g CPC/ml-broth in complex medium in shake flask fermentation. Ichikawa``s agar piece method was used for rapid selection of higher producing mutants. Medium n-4 which showed minimum coefficient of variation(C.V.) was used for agar piece method. By using this method, high producing mutant strain M-113 was selected from over 30,000 colonies. Fermentation variables were studied to improve the fermentation process. They were glucose concentration, pH, dry cell weight, antibiotic concentration, and cephalosporin C acetyl hydrolase (CAH) activity. TLC and bioautography methods were employed to determine the fermentation products including pen N, CPC, DCPC as the function of the fermentation time. Relationship between CPC production and morphological differentiation was also observed. The maximum CPC productivity was obtained during the formation of arthrospores. Following complex medium was formulated for the maximum production of CPC by optimization studies at flask level : glucose;5g sourose;20g, soybean meal; 30g, peanut meal;30g, D.L.-methionine;10g, CaCO$_3$;10g, Borax;0.5g, and distilled water 1000ml. By using this medium at the optimum culture conditions, strain M-113 produced 2,700$\mu$gCPC/ml-broth in flask level, 4,200$\mu$gCPC/ml-broth in 2.5$\ell$-jar fermentor level. During the high CPC production phase, CPC was broken down to DCPC by CAH. The enzyme activity appeared as CPC starts to accumulate and then increased rapidly. And the CAH activity was detected after complete consumption of glucose and affected by pH. On the basis of these findings, studies were made to regulate CAH activity. CAH activity was repressed by feeding glucose into fermentation system continuously. Regulation of CAH activity at pH value 6.0 was also examined.