Biosynthesis of the macrolactone ring of FK506 involves 10 elongation cycles that mechanistically resemble the steps in fatty acid synthesis. Sequencing of a 40-kb DNA segment of the FK506 gene cluster from Streptomyces sp. MA6548 has revealed two additional polyketide synthases (PKS) genes fkbB and fkbC which lie upstream of fkbA, a PKS gene recently shown to be responsible for the last four condensation steps of the FK506 biosynthesis [Motamedi, H., Cai, S. J., Shafiee, A. & Elliston, K. O. (1997) fur: J. Biochem. 244, 74-80]. fkbB and fkbC are contiguous and encode respectively, the first (790129 Dal and the second (374438 Dal components of the FK506 polyketide synthase, a complex of three multidomain polypeptides. The predicted domain structures of FkbB and FkbC are analogous to that of FkbA and comprise 30 fatty-acid-synthase(FAS)-like domains arranged in 6 modules. Each module performs a specific extension cycle in the assembly of the carbon skeleton of the FK506 macrolactone ring. The component activities for the initiation of the polyketide chain consisting of a dihydrocyclohexenylcarbonyl coenzyme A (CoA) synthetase and a dihydrocyclohexenylcarbonyl CoA reductase required for the formation of the dihydrocyclohexylcarbonyl CoA starter unit and an acyl-carrier-protein to which the starter unit is anchored and translocated to the appropriate site on the PKS multienzyme are located at the N-terminal region of the FkbB polypeptide. A third gene, fkbL, lies at one end of the cluster and encodes lysine cyclodeaminase which catalyzes a-deamination and cyclization of the lysine into pipecolate. A fourth gene fkbP located at the other end of the sequence reported here encodes a peptide synthetase required for the activation and incorporation of the pipecolate moiety into the completed acyl chain. Finally the cluster carries a gene, fkbO, whose product is presumed to carry out a post-polyketide oxidation step of the FK506 marocycle.