The iridoids comprise a large family of distinctive bicyclic monoterpenes that possess a wide range of pharmacological activities, including anticancer, anti-inflammatory, antifungal and antibacterial activities. Additionally, certain iridoids are used as sex pheromones in agriculturally important species of aphids, a fact that has underpinned innovative and integrated pest management strategies. To harness the biotechnological potential of this natural product class, the enzymes involved in the biosynthetic pathway must be elucidated. Here we report the discovery of iridoid synthase, a plant-derived enzyme that generates the iridoid ring scaffold, as evidenced by biochemical assays, gene silencing, co-expression analysis and localization studies. In contrast to all known monoterpene cyclases, which use geranyl diphosphate as substrate and invoke a cationic intermediate, iridoid synthase uses the linear monoterpene 10-oxogeranial as substrate and probably couples an initial NAD(P)H-dependent reduction step with a subsequent cyclization step via a Diels-Alder cycloaddition or a Michael addition. Our results illustrate how a short-chain reductase was recruited as cyclase for the production of iridoids in medicinal plants. Furthermore, we highlight the prospects of using unrelated reductases to generate artificial cyclic scaffolds. Beyond the recognition of an alternative biochemical mechanism for the biosynthesis of cyclic terpenes, we anticipate that our work will enable the large-scale heterologous production of iridoids in plants and microorganisms for agricultural and pharmaceutical applications.