The starter unit used in the biosynthesis of daunorubicin is propionyl coenzyme A (CoA) rather than acetyl-CoA, which is used in the production of most of the bacterial aromatic polyketides studied to date. In the daunorubicin biosynthesis gene cluster of Streptomyces peucetius, directly downstream of the genes encoding the beta-ketoacyl:acyl carrier protein synthase subunits, are two genes, dpsC and dpsD, encoding proteins that are believed to function as the starter unit-specifying enzymes. Recombinant strains containing plasmids carrying dpsC and dpsD, in addition to other daunorubicin polyketide synthase (PKS) genes, incorporate the correct starter unit into polyketides made by these genes, suggesting that, contrary to earlier reports, the enzymes encoded by dpsC and dpsD play a crucial role in starter unit specification. Additionally, the results of a cell-free synthesis of 21-carbon polyketides from propionyl-CoA and malonyl-CoA that used the protein extracts of recombinant strains carrying other daunorubicin PKS genes to which purified DpsC was added suggest that this enzyme has the primary role in starter unit discrimination for daunorubicin biosynthesis.