Indole-diterpenes are a structurally diverse group of secondary metabolites with a common cyclic diterpene backbone derived from geranylgeranyl diphosphate and an indole group derived from indole-3-glycerol phosphate. Different types and patterns of ring substitutions and ring stereochemistry generate this structural diversity. This group of compounds is best known for their neurotoxic effects in mammals, causing syndromes such as 'ryegrass staggers' in sheep and cattle. Because many of the fungi that synthesise these compounds form symbiotic relationships with plants, insects, and other fungi, the synthesis of these compounds may confer an ecological advantage to these associations. Considerable recent progress has been made on understanding indole-diterpene biosynthesis in filamentous fungi, principally through the cloning and characterisation of the genes and gene products for paxilline biosynthesis in Penicillium paxilli. Important insights into how the indole-diterpene backbone is synthesised and decorated have been obtained using P. paxilli mutants in this pathway. This review provides an overview of these recent developments.