FD-891 is a 16-membered cytotoxic antibiotic macrolide that is especially active against human leukemia such as HL-60 and Jurkat cells. We identified the FD-891 biosynthetic (gfs) gene cluster from the producer Streptomyces graminofaciens A-8890 by using typical modular type I polyketide synthase (PKS) genes as probes. The gfs gene cluster contained five typical modular type I PKS genes (gfsA, B, C, D, and E), a cytochrome P450 gene (gfsF), a methyltransferase gene (gfsG), and a regulator gene (gfsR). The gene organization of PKSs agreed well with the basic polyketide skeleton of FD-891 including the oxidation states and alpha-alkyl substituent determined by the substrate specificities of the acyltransferase (AT) domains. To clarify the involvement of the gfs genes in the FD-891 biosynthesis, the P450 gfsF gene was inactivated; this resulted in the loss of FD-891 production. Instead, the gfsF gene-disrupted mutant accumulated a novel FD-891 analogue 25-O-methyl-FD-892, which lacked the epoxide and the hydroxyl group of FD-891. Furthermore, the recombinant GfsF enzyme coexpressed with putidaredoxin and putidaredoxin reductase converted 25-O-methyl-FD-892 into FD-891. In the course of the GfsF reaction, 10-deoxy-FD-891 was isolated as an enzymatic reaction intermediate, which was also converted into FD-891 by GfsF. Therefore, it was clearly found that the cytochrome P450 GfsF catalyzes epoxidation and hydroxylation in a stepwise manner in the FD-891 biosynthesis. These results clearly confirmed that the identified gfs genes are responsible for the biosynthesis of FD-891 in S. graminofaciens.