Chalcone synthase (CHS) related type III plant polyketide synthases (PKSs) are likely to be involved in the biosynthesis of diarylheptanoids (e.g. curcumin and polycyclic phenylphenalenones), but no such activity has been reported. Root cultures from Wachendorfia thyrsiflora (Haemodoraceae) are a suitable source to search for such enzymes because they synthesize large amounts of phenylphenalenones, but no other products that are known to require CHSs or related enzymes (e.g. flavonoids or stilbenes). A homology-based RT-PCR strategy led to the identification of cDNAs for a type III PKS sharing only approximately 60% identity with typical CHSs. It was named WtPKS1 (W. thyrsiflora polyketide synthase 1). The purified recombinant protein accepted a large variety of aromatic and aliphatic starter CoA esters, including phenylpropionyl- and side-chain unsaturated phenylpropanoid-CoAs. The simplest model for the initial reaction in diarylheptanoid biosynthesis predicts a phenylpropanoid-CoA as starter and a single condensation reaction to a diketide. Benzalacetones, the expected release products, were observed only with unsaturated phenylpropanoid-CoAs, and the best results were obtained with 4-coumaroyl-CoA (80% of the products). With all other substrates, WtPKS1 performed two condensation reactions and released pyrones. We propose that WtPKS1 catalyses the first step in diarylheptanoid biosynthesis and that the observed pyrones are derailment products in the absence of downstream processing proteins.