Carnosic acid (CA) is a phenolic diterpene with anti-tumour, anti-diabetic, antibacterial and neuroprotective properties that is produced by a number of species from several genera of the Lamiaceae family, including Salvia fruticosa (Cretan sage) and Rosmarinus officinalis (Rosemary). To elucidate CA biosynthesis, glandular trichome transcriptome data of S. fruticosa were mined for terpene synthase genes. Two putative diterpene synthase genes, namely SfCPS and SfKSL, showing similarities to copalyl diphosphate synthase and kaurene synthase-like genes, respectively, were isolated and functionally characterized. Recombinant expression in Escherichia coli followed by in vitro enzyme activity assays confirmed that SfCPS is a copalyl diphosphate synthase. Coupling of SfCPS with SfKSL, both in vitro and in yeast, resulted in the synthesis miltiradiene, as confirmed by 1D and 2D NMR analyses (1H, 13C, DEPT, COSY H-H, HMQC and HMBC). Coupled transient in vivo assays of SfCPS and SfKSL in Nicotiana benthamiana further confirmed production of miltiradiene in planta. To elucidate the subsequent biosynthetic step, RNA-Seq data of S. fruticosa and R. officinalis were searched for cytochrome P450 (CYP) encoding genes potentially involved in the synthesis of the first phenolic compound in the CA pathway, ferruginol. Three candidate genes were selected, SfFS, RoFS1 and RoFS2. Using yeast and N. benthamiana expression systems, all three where confirmed to be coding for ferruginol synthases, thus revealing the enzymatic activities responsible for the first three steps leading to CA in two Lamiaceae genera.