The analysis of a candidate biosynthetic gene cluster (97 kbp) for the polyether ionophore monensin from Streptomyces cinnamonensis has revealed a modular polyketide synthase composed of eight separate multienzyme subunits housing a total of 12 extension modules, and flanked by numerous other genes for which a plausible function in monensin biosynthesis can be ascribed. Deletion of essentially all these clustered genes specifically abolished monensin production, while overexpression in S. cinnamonensis of the putative pathway-specific regulatory gene monR led to a fivefold increase in monensin production. Experimental support is presented for a recently-proposed mechanism, for oxidative cyclization of a linear polyketide intermediate, involving four enzymes, the products of monBI, monBII, monCI and monCII. In frame deletion of either of the individual genes monCII (encoding a putative cyclase) or monBII (encoding a putative novel isomerase) specifically abolished monensin production. Also, heterologous expression of monCI, encoding a flavin-linked epoxidase, in S. coelicolor was shown to significantly increase the ability of S. coelicolor to epoxidize linalool, a model substrate for the presumed linear polyketide intermediate in monensin biosynthesis.