Methylisoborneol (2) is a volatile organic compound produced by a wide variety of Actinomycetes soil orgainisms, myxobacteria, and cyanobacteria. It has an unusually low odor threshold and, together with geosmin, is responsible for the characteristics smell of moist soil as well as unpleasant taste and odor episodes assoiciated with public water supplies and contamination of various foodstuffs, including fish, wine and beer. Despite considerable interest in detection and remediation of methylisoborneal, the biosynthesis of this methylated monoterpene has been obscure. In Streptomyces coelicor, the sco7700 and sco7701 genes are shown to correspond to a two-gene operon responsible for methylisoborneol biosynthesis. Both genes have been amplified by PCR and the resulting DNA has been cloned and expressed in Escherichia coli. Incubation of recombinant SCO7701 protein, annotated as a possible C-methyltransferase, with geranyl diphosphate (1) and S-adenosylmethionine gave the previously unknown compound. (E)-2-methylgeranyl diphosphate (3). Incubation of 3 in the presence of Mg2+ with recombinant SCO7700, previously annotated only as a possible metal-binding protein or terpenoid synthase, resulted in the formation of 2-methylisoborneal (2). The steady-state kinetic parameters for both biochemical reactions have been determined. Incubation of geranyl diphosphate and S-adenosylmethionine with a mixture of both SCO7700 and SCO7701 resulted in formation of methylisoborneal (2). Cyclization of 2-methylgeranyl diphosphate (3) to methylisoborneal (2) likely involves the intermediacy of 2-methylinalyl diphosphate.