Kendomycin is a bioactive polyketide that is produced by various Streptomyces strains. It displays strong antibiotic activities against a wide range of bacteria and exhibits remarkable cytotoxic effects on the growth of several human cancer cell lines. In this study we cloned the corresponding biosynthetic locus from the producer Streptomyces violaceoruber (strain 3844-33C). Our analysis shows that a mixed type I/type III polyketide synthase pathway is responsible for the formation of the fully carbogenic macrocyclic scaffold of kendomycin, which is unprecedented among all of the ansa compounds that have been isolated so far. Heterologous expression of a gene set in Streptomyces coelicolor shows that 3,5-dihydroxybenzoic acid is an intermediate in the starter unit biosynthesis that is initiated by the type III polyketide synthase. The identification of the kendomycin biosynthetic gene cluster sets the stage to study a novel chain termination mechanism by a type I PKS that leads to carbocycle formation and provides the starting material for the heterologous expression of the entire pathway, and the production of novel derivatives by genetic engineering.