Biosynthesis of the polyketide-derived carbon skeleton of daunorubicin (DNR) begins with propionate rather than acetate, which is the starter unit for most other aromatic polyketides. The dpsC gene has been implicated in specifying the unique propionate-starter unit, and it encodes a protein that is very similar to the Escherichia coli beta-ketoacyl:acyl carrier protein (ACP) synthase III (FabH or KS III) enzyme of fatty acid biosynthesis. Purified DpsC was found to use propionyl-coenzyme A as substrate and to be acylated by propionate at the Ser-118 residue. DpsC exhibits KS III activity in catalyzing The condensation of propionyl-CoA and malonyl-ACP, and also functions as an acyltransferase in the transfer of propionate to an ACP. The DpsC enzyme has a high-substrate specificity, utilizing only propionyl-CoA, and not malonyl-CoA, 2-methylmalonyl-CoA or acetyl-CoA, as the starter unit of DNR biosynthesis.