Penicillin-resistant pneumococci have been reported with increasing frequency in recent years. Isolates with high-level resistance are now found in many countries, and in some countries they constitute a substantial proportion of all isolates. A worrying development is the recent emergence of pneumococci with high-level resistance to third-generation cephalosporins. Resistance to beta-lactam antibiotics in pneumococci is due entirely to the development of altered forms of the high-molecular-weight penicillin-binding proteins (PBPs) that have decreased affinity for the antibiotics. High-level resistance to third-generation cephalosporins has occurred by the development of altered forms of PBP1a and 2x, whereas high-level penicillin resistance additionally requires alterations of PBP2b. Altered PBPs are encoded by mosaic genes that have emerged by recombinational events between the pbp genes of pneumococci and their homologs in closely related streptococcal species. Horizontal gene transfer, presumably mediated by genetic transformation, has also resulted in the dissemination of altered pbp genes, and possibly capsular biosynthetic genes, between different pneumococcal lineages to produce new resistant clones.