Penilactones A and B consist of a gamma-butyrolactone and two clavatol moieties. We identified two separate gene clusters for the biosynthesis of these key building blocks in Penicillium crustosum. Gene deletion, feeding experiments, and biochemical investigations proved that a nonreducing PKS ClaF is responsible for the formation of clavatol and the PKS-NRPS hybrid TraA is involved in the formation of crustosic acid, which undergoes decarboxylation and isomerization to the predominant terrestric acid. Both acids are proposed to be converted to gamma-butyrolactones with involvement of a cytochrome P-450 ClaJ. Oxidation of clavatol to hydroxyclavatol by a nonheme Fe-II/2-oxoglutarate-dependent oxygenase ClaD and its spontaneous dehydration to an ortho-quinone methide initiate the two nonenzymatic 1,4-Michael addition steps. Spontaneous addition of the methide to the gamma-butyrolactones led to peniphenone D and penilactone D, which undergo again stereospecific attacking by methide to give penilactones A/B.