Pentalenolactone is a microbial sesquiterpenoid with antibiotic activity. Its biosynthetic pathway was elucidated by a combination of genetic and biochemical characterizations of all genes involved. For the related neopentalenoketolactone biosynthetic gene cluster from Streptomyces avermitilis, an α-ketoglutarate-dependent mononuclear nonheme iron enzyme, PtlD, was proposed to catalyze both desaturation and olefin epoxidation reactions. Yet, these activities remained to be validated by in vitro biochemical evidence. In this report, we demonstrated that PtlD has multiple activities, including hydroxylation, desaturation, and epoxidation, and confirmed the presence of the elusive epoxide intermediate in a neopentalenoketolactone pathway.