We have previously demonstrated that the biosynthesis of the C(7)-cyclitol, called valienol (or valienamine), of the alpha-glucosidase inhibitor acarbose starts from the cyclization of sedo-heptulose 7-phosphate to 2-epi-5-epi-valiolone (Stratmann, A., Mahmud, T., Lee, S., Distler, J., Floss, H. G., and Piepersberg, W. (1999) J. Biol. Chem. 274, 10889-10896). Synthesis of the intermediate 2-epi-5-epi-valiolone is catalyzed by the cyclase AcbC encoded in the biosynthetic (acb) gene cluster of Actinoplanes sp. SE50/110. The acbC gene lies in a possible transcription unit, acbKLMNOC, cluster encompassing putative biosynthetic genes for cyclitol conversion. All genes were heterologously expressed in strains of Streptomyces lividans 66 strains 1326, TK23, and TK64. The AcbK protein was identified as the acarbose 7-kinase, which had been described earlier (Drepper, A., and Pape, H. (1996) J. Antibiot. (Tokyo) 49, 664-668). The multistep conversion of 2-epi-5-epi-valiolone to the final cyclitol moiety was studied by testing enzymatic mechanisms such as dehydration, reduction, epimerization, and phosphorylation. Thus, a phosphotransferase activity was identified modifying 2-epi-5-epi-valiolone by ATP-dependent phosphorylation. This activity could be attributed to the AcbM protein by verifying this activity in S. lividans strain TK64/pCW4123M, expressing His-tagged AcbM. The His-tagged AcbM protein was purified and subsequently characterized as a 2-epi-5-epi-valiolone 7-kinase, presumably catalyzing the first enzyme reaction in the biosynthetic route, leading to an activated form of the intermediate 1-epi-valienol. The AcbK protein could not catalyze the same reaction nor convert any of the other C(7)-cyclitol monomers tested. The 2-epi-5-epi-valiolone 7-phosphate was further converted by the AcbO protein to another isomeric and phosphorylated intermediate, which was likely to be the 2-epimer 5-epi-valiolone 7-phosphate. The products of both enzyme reactions were characterized by mass spectrometric methods. The product of the AcbM-catalyzed reaction, 2-epi-5-epi-valiolone 7-phosphate, was purified on a preparative scale and identified by NMR spectroscopy. A biosynthetic pathway for the pseudodisaccharidic acarviosyl moiety of acarbose is proposed on the basis of these data.