Type I modular polyketide synthases assemble diverse bioactive natural products. Such multienzymes typically use malonyl and methylmalonyl-CoA building blocks for polyketide chain assembly. However, in several cases more exotic alkylmalonyl-CoA extender units are also known to be incorporated. In all examples studied to date, such unusual extender units are biosynthesized via reductive carboxylation of α, β-unsaturated thioesters catalysed by crotonyl-CoA reductase/carboxylase (CCRC) homologues. Here we show using a chemically-synthesized deuterium-labelled mechanistic probe, and heterologous gene expression experiments that the unusual alkylmalonyl-CoA extender units incorporated into the stambomycin family of polyketide antibiotics are assembled by direct carboxylation of medium chain acyl-CoA thioesters. X-ray crystal structures of the unusual β-subunit of the acyl-CoA carboxylase (YCC) responsible for this reaction, alone and in complex with hexanoyl-CoA, reveal the molecular basis for substrate recognition, inspiring the development of methodology for polyketide bio-orthogonal tagging via incorporation of 6-azidohexanoic acid and 8-nonynoic acid into novel stambomycin analogues.