Ambruticins and jerangolids are structurally related antifungal polyketides produced by Sorangium cellulosum strains. Comparative analysis of the gene clusters and characterization of compounds produced by gene knockout strains suggested hypothetical schemes for biosynthesis of these compounds. Polyketide synthase (PKS) architecture suggests that the pyran ring structure common to ambruticins and jerangolids forms by an intramolecular reaction on a PKS-bound intermediate. Disrupting ambM, encoding a discrete enzyme homologous to PKS C-methyltransferase domains, gave 15-desmethylambruticins. Thus, AmbM is required for C-methylation, but not pyran ring formation. Several steps in the post-PKS modification of ambruticin involve new enzymology. Remarkably, the methylcyclopropane ring and putative carbon atom excision during ambruticin biosynthesis apparently occur on the PKS assembly line. The mechanism probably involves a Favorskii rearrangement, but further work is required to elucidate these complex events.