Monascorubrin and its derivatives are polyketides used as natural colorants for a wide range of food for more than one thousand years. Since the biosynthetic pathway for this ancient chemical compound is unknown and genome sequence unavailable for any Monascus species, monascorubrin production has relied on extraction from fungal cultures of Monascus species. In vitro synthesis and genetic manipulation are not possible. Here we report the polyketide gene cluster and pathway for monascorubrin biosynthesis in Penicillium marneffei, a diffusible red pigment-producing, thermal dimorphic fungus, taking advantage of available genome sequence and faster growth rate than Monascus species. We also documented that the red pigment of P. marneffei is a mixture of more than 16 chemical compounds, which are amino acid conjugates of monascorubrin and rubropunctatin, and showed that this polyketide gene cluster and pathway are also responsible for biosynthesis of ankaflavin and citrinin, a mycotoxin with nephrotoxic activity in mammals. The present study on elucidation of the biosynthetic pathway of monascorubrin is a proof-of-the-concept study that serves as a cornerstone for future studies on monascorubrin biosynthesis pathway dissection in Monascus species.