Teleocidin B, with its unique indolactam-terpenoid scaffold, is a potent activator of protein kinase C. This short review summarizes our recent research progress on the biosynthesis of teleocidins in Streptomyces blastmyceticus NBRC 12747. We first identified the biosynthetic genes for teleocidin B, which include genes encoding a non-ribosomal peptide synthetase (tleA), a cytochrome P450 monooxygenase (tleB), an indol prenyltransferase (tleC), and a C-methyltransferase (tleD). Notably, the tleD gene is located outside the tleABC cluster. Our in vivo and in vitro analyses revealed that TleD not only catalyzes the C-methylation of the prenyl chain but also produces the indole-fused cyclic terpene structure. This is the first report of terpene cyclization initiated by the C-methylation of the prenyl double bond. In contrast, TleC catalyzes the geranylation of the C-7 position of the indole ring, in the reverse fashion. Our X-ray crystallographic analyses provided the structural basis for the reverse prenylation reactions, and structure-based mutagenesis successfully resulted in the production of unnatural, novel prenylated indolactams.