The fungal neurotoxin alpha-cyclopiazonic acid (CPA), a nanomolar inhibitor of Ca(2+)-ATPase with a unique pentacyclic indole tetramic acid scaffold, is assembled by a three enzyme pathway CpaS, CpaD, and CpaO in Aspergillus sp. We recently characterized the first pathway-specific enzyme CpaS, a hybrid two module polyketide synthase-nonribosomal peptide synthetase (PKS-NRPS) that generates cyclo-acetoacetyl-L-tryptophan (cAATrp). Here we report the characterization of the second pathway-specific enzyme CpaD that regiospecifically dimethylallylates cAATrp to form beta-cyclopiazonic acid. By exploring the tryptophan and tetramate moieties of cAATrp, we demonstrate that CpaD discriminates against free Trp but accepts tryptophan-containing thiohydantoins, diketopiperazines, and linear peptides as substrates for C4-prenylation and also acts as regiospecific O-dimethylallyltransferase (DMAT) on a tyrosine-derived tetramic acid. Comparative evaluation of CpaDs from A. oryzae RIB40 and A. flavus NRRL3357 indicated the importance of the N-terminal region for its activity. Sequence alignment of CpaD with 11 homologous fungal Trp-DMATs revealed five regions of conservation, suggesting the presense of critical motifs that could be diagonostic for discovering additional Trp-DMATs. Subsequent site-directed mutagenesis studies identified five polar/charged residues and five tyrosine residues within these motifs that are critical for CpaD activity.