The present invention is directed to compositions and methods for producing avermectins, and is primarily in the field of animal health. The present invention relates to the identification and characterization of two novel genes, herein referred to as the aveR1 and aveR2 genes, that are involved in regulating avermectin polyketide synthase (PKS) expression and avermectin biosynthesis in Streptomyces avermitilis. The present invention is based on the discovery that inactivation of these genes results in an increase in the amount of avermectin produced by S. avermitilis.