The hydroxylated and diacetylated cyclo-l-Trp-l-Leu derivative (-)-protubonine B was isolated from a culture of Aspergillus ustus 3.3904. Genome mining led to the identification of a putative biosynthetic gene cluster coding for a bimodular nonribosomal peptide synthetase, a flavin-dependent monooxygenase, and two acetyltransferases. Heterologous expression of the pbo cluster in Aspergillus nidulans showed that it is responsible for the formation of the isolated metabolite. Gene deletion experiments and structural elucidation of the isolated intermediates confirmed the biosynthetic steps. In vitro experiments with the recombinant protein proved that the flavin-dependent oxygenase is responsible for stereospecific hydroxylation at the indole ring accompanied by pyrrolidine ring formation.