The putative biosynthetic gene cluster for the alpha-glucosidase inhibitor acarbose was identified in the producer Actinoplanes sp. 50/110 by cloning a DNA segment containing the conserved gene for dTDP-D-glucose 4,6-dehydratase, acbB. The two flanking genes were acbA (dTDP-D-glucose synthase) and acbC, encoding a protein with significant similarity to 3-dehydroquinate synthases (AroB proteins). The acbC gene was overexpressed heterologously in Streptomyces lividans 66, and the product was shown to be a C7-cyclitol synthase using sedo-heptulose 7-phosphate, but not ido-heptulose 7-phosphate, as its substrate. The cyclization product, 2-epi-5-epi-valiolone ((2S,3S,4S,5R)-5-(hydroxymethyl)cyclohexanon-2,3,4,5-tetrol), is a precursor of the valienamine moiety of acarbose. A possible five-step reaction mechanism is proposed for the cyclization reaction catalyzed by AcbC based on the recent analysis of the three-dimensional structure of a eukaryotic 3-dehydroquinate synthase domain (Carpenter, E. P., Hawkins, A. R., Frost, J. W., and Brown, K. A. (1998) Nature 394, 299-302).