Cercosporin is a light-activated, non-host-selective toxin produced by many Cercospora fungal species. In this study, a polyketide synthase gene (CTB1) was functionally identified and molecularly characterized to play a key role in cercosporin biosynthesis by Cercospora nicotianae. We also provide conclusive evidence to confirm the crucial role of cercosporin in fungal pathogenesis. CTB1 encoded a polypeptide with a deduced length of 2,196 amino acids containing a keto synthase (KS), an acyltransferase (AT), a thioesterase/claisen cyclase (TE/CYC), and two acyl carrier protein (ACP) domains, and had high levels of similarity to many fungal type I polyketide synthases. Expression of a 6.8-kb CTB1 transcript was highly regulated by light and medium composition, consistent with the conditions required for cercosporin biosynthesis in cultures. Targeted disruption of CTB1 resulted in the loss of both CTB1 transcript and cercosporin biosynthesis in C. nicotianae. The ctb1-null mutants incited fewer necrotic lesions on inoculated tobacco leaves compared with the wild type. Complementation of ctb1-null mutants with a full-length CTB1 clone restored wild-type levels of cercosporin production as well as the ability to induce lesions on tobacco. Thus, we have demonstrated conclusively that cercosporin is synthesized via a polyketide pathway, and cercosporin is an important virulence factor in C. nicotianae. The results also suggest that strategies that avoid the toxicity of cercosporin will be useful in reduction of disease incidence caused by Cercospora spp.