A purified isolate of an actinomycete identified as ATCC 39364 is capable of producing the antimicrobial/antitumor compound 2-amino-1,9-dihydro-6H-purine-6-one-7-oxide, commonly known as guanine-N.sup.7 -oxide.Guanine-N.sup.7 -oxide is produced by cultivating isolate ATCC 39364 under aerobic conditions in a culture medium containing assimilable sources of carbon and nitrogen until a substantial amount of the compound is produced and thereafter isolating the compound.The antibiotic/antitumor compound guanine-N.sup.7 -oxide and pharmaceutical compositions comprising this compound or one of its pharmaceutically acceptable salts together with a pharmaceutically acceptable carrier are also disclosed as is a method of treating microbial infections in a mammal or of treating tumors in a mammal.