Staurosporine isolated from Streptomyces sp. TP-A0274 is a member of the family of indolocarbazole alkaloids that exhibit strong antitumor activity. A key step in staurosporine biosynthesis is the formation of the indolocarbazole core by intramolecular C-C bond formation and oxidative decarboxylation of chromopyrrolic acid (CPA) catalyzed by cytochrome P450 StaP (StaP, CYP245A1). In this study, we report x-ray crystal structures of CPA-bound and -free forms of StaP. Upon substrate binding, StaP adopts a more ordered conformation, and conformational rearrangements of residues in the active site are also observed. Hydrogen-bonding interactions of two carboxyl groups and T-shaped pi-pi interactions with indole rings hold the substrate in the substrate-binding cavity with a conformation perpendicular to the heme plane. Based on the crystal structure of StaP-CPA complex, we propose that C-C bond formation occurs through an indole cation radical intermediate that is equivalent to cytochrome c peroxidase compound I [Sivaraja M, Goodin DB, Smith M, Hoffman BM (1989) Science 245:738-740]. The subsequent oxidative decarboxylation reaction is also discussed based on the crystal structure. Our crystallographic study shows the first crystal structures of enzymes involved in formation of the indolocarbazole core and provides valuable insights into the process of staurosporine biosynthesis, combinatorial biosynthesis of indolocarbazoles, and the diversity of cytochrome P450 chemistry.