Oxidative coupling and oxidative rearrangement are two of the most common biosynthetic strategies to form diaryl ethers. In contrast, enzymatic diaryl ether generation that proceeds in a nonoxidative manner has not been characterized thus far. Here, we discovered a versatile thioesterase (TE) domain from the nonreducing polyketide synthase (nrPKS) AN7909, which catalyzes diaryl ether formation through a series of successive steps involving esterification, a Smiles rearrangement, and hydrolysis. Further mutations and biochemical analyses with synthetic mimic substrates provide insight into the proposed catalytic process of the TE domain.