Yatakemycin (YTM), an antitumor natural product, represents the most potent member of a class of potent anticancer natural products including CC-1065 and duocarmycins. Herein we describe the biosynthetic gene cluster of YTM, which was identified by genome scanning of Streptomyces sp. TP-A0356. This cluster consists of 31 open reading frames (ORFs) and was localized to a 36 kb DNA segment. Moreover, its involvement in YTM biosynthesis was confirmed by cluster deletion, gene replacement, and complementation. Inactivation of ytkT, which encodes a radical S-adenosylmethionine (SAM) protein, created a mutant strain that failed to produce YTM but accumulated a new metabolite, which was structurally elucidated as a precursor that was related to the formation of the cyclopropane ring. More importantly, biochemical characterization of the radical SAM-dependent enzyme YtkT revealed that it is a novel C-methyltransferase and contributes to an advanced intermediate during formation of the cyclopropane ring through a radical mechanism in the YTM biosynthetic pathway. On the basis of in silico analysis, genetic experiments, structure elucidation of the novel intermediate, and biochemical characterization, a biosynthetic pathway for yatakemycin was proposed, which sets the stage to further investigate the novel enzymatic mechanisms and engineer the biosynthetic machinery for the production of novel analogues.