The transition from primary to secondary metabolism in antibiotic-producing Streptomyces correlates with expression of genes involved in stress responses. Consequently, regulatory pathways that regulate specific stress responses are potential targets to manipulate to increase antibiotic titers. In this study, genes encoding key proteins involved in regulation of the osmotic stress response in Streptomyces avermitilis, the industrial producer of avermectins, are investigated as targets. Disruption of either osaBSa, encoding a response regulator protein, or osaCSa, encoding a multidomain regulator of the alternative sigma factor SigB, led to increased production of both oligomycin, by up to 200%, and avermectin, by up to 37%. The mutations also conditionally affected morphological development; under osmotic stress, the mutants were unable to erect an aerial mycelium. In addition, we demonstrate the delivery of DNA into a streptomycete using biolistics. The data reveal that information on stress regulatory responses can be integrated in rational strain improvement to improve yields of bioactive secondary metabolites.