Aromatic polyketides are a class of natural products that include many pharmaceutically important aromatic compounds. Understanding the structure and function of PKS will provide clues to the molecular basis of polyketide biosynthesis specificity. Polyketide chain reduction by ketoreductase (KR) provides regio- and stereochemical diversity. Two cocrystal structures of actinorhodin polyketide ketoreductase (act KR) were solved to 2.3 A with either the cofactor NADP(+) or NADPH bound. The monomer fold is a highly conserved Rossmann fold. Subtle differences between structures of act KR and fatty acid KRs fine-tune the tetramer interface and substrate binding pocket. Comparisons of the NADP(+)- and NADPH-bound structures indicate that the alpha6-alpha7 loop region is highly flexible. The intricate proton-relay network in the active site leads to the proposed catalytic mechanism involving four waters, NADPH, and the active site tetrad Asn114-Ser144-Tyr157-Lys161. Acyl carrier protein and substrate docking models shed light on the molecular basis of KR regio- and stereoselectivity, as well as the differences between aromatic polyketide and fatty acid biosyntheses. Sequence comparison indicates that the above features are highly conserved among aromatic polyketide KRs. The structures of act KR provide an important step toward understanding aromatic PKS and will enhance our ability to design novel aromatic polyketide natural products with different reduction patterns.