One of the hallmark behaviors of social groups is division of labour, where different group members become specialized to carry out complementary tasks. By dividing labour, cooperative groups of individuals increase their efficiency, thereby raising group fitness even if these specialized behaviors reduce the fitness of individual group members. Here we provide evidence that antibiotic production in colonies of the multicellular bacterium Streptomyces coelicolor is coordinated by a division of labour. We show that S. coelicolor colonies are genetically heterogeneous due to massive amplifications and deletions to the chromosome. Cells with gross chromosomal changes produce an increased diversity of secondary metabolites and secrete significantly more antibiotics; however, these changes come at the cost of dramatically reduced individual fitness, providing direct evidence for a trade-off between secondary metabolite production and fitness. Finally, we show that colonies containing mixtures of mutant strains and their parents produce significantly more antibiotics, while colony-wide spore production remains unchanged. Our work demonstrates that by generating mutants that are specialized to hyper-produce antibiotics, streptomycetes reduce the colony-wide fitness costs of secreted secondary metabolites while maximizing the yield and diversity of these products.