During our search for novel prenyltransferases, a putative gene ATEG_04218 from Aspergillus terreus raised our attention and was therefore amplified from strain DSM 1958 and expressed in Escherichia coli. Biochemical investigations with the purified recombinant protein and different aromatic substrates in the presence of dimethylallyl diphosphate revealed the acceptance of all the tested tryptophan-containing cyclic dipeptides. Structure elucidation of the main enzyme products by NMR and MS analyses confirmed the attachment of the prenyl moiety to C-7 of the indole ring, proving the identification of a cyclic dipeptide C7-prenyltransferase (CdpC7PT). For some substrates, reversely C3- or N1-prenylated derivatives were identified as minor products. In comparison to the known tryptophan-containing cyclic dipeptide C7-prenyltransferase CTrpPT from Aspergillus oryzae, CdpC7PT showed a much higher substrate flexibility. It also accepted cyclo-L-Tyr-L-Tyr as substrate and catalyzed an O-prenylation at the tyrosyl residue, providing the first example from the dimethylallyltryptophan synthase (DMATS) superfamily with an O-prenyltransferase activity towards dipeptides. Furthermore, products with both C7-prenyl at tryptophanyl and O-prenyl at tyrosyl residue were detected in the reaction mixture of cyclo-L-Trp-L-Tyr. Determination of the kinetic parameters proved that (S)-benzodiazepinedione consisting of a tryptophanyl and an anthranilyl moiety was accepted as the best substrate with a K M value of 204.1 μM and a turnover number of 0.125 s(-1). Cyclo-L-Tyr-L-Tyr was accepted with a K M value of 1,411.3 μM and a turnover number of 0.012 s(-1).