Fosfomycin is a wide-spectrum phosphonate antibiotic that is used clinically to treat cystitis, tympanitis, etc. Its biosynthesis starts with the formation of a carbon-phosphorus bond catalyzed by the phosphoenolpyruvate phosphomutase Fom1. We identified an additional cytidylyltransferase (CyTase) domain at the Fom1 N-terminus in addition to the phosphoenolpyruvate phosphomutase domain at the Fom1 C-terminus. Here, we demonstrate that Fom1 is bifunctional and that the Fom1 CyTase domain catalyzes the cytidylylation of the 2-hydroxyethylphosphonate (HEP) intermediate to produce cytidylyl-HEP. On the basis of this new function of Fom1, we propose a revised fosfomycin biosynthetic pathway that involves the transient CMP-conjugated intermediate. The identification of a biosynthetic mechanism via such transient cytidylylation of a biosynthetic intermediate fundamentally advances the understanding of phosphonate biosynthesis in nature. The crystal structure of the cytidylyl-HEP-bound CyTase domain provides a basis for the substrate specificity and reveals unique catalytic elements not found in other members of the CyTase family.