Simocyclinone D8 (SD8) is a potent DNA gyrase inhibitor produced by Streptomyces antibioticus Tü6040. The simocyclinone (sim) biosynthetic gene cluster has been sequenced and a hypothetical biosynthetic pathway proposed. The tetraene linker in SD8 was suggested to be the product of a modular type I polyketide synthase (PKS) working in trans with two monofunctional enzymes. One of these monofunctional enzymes, SimC7, was proposed to supply a dehydratase activity missing from two modules of the PKS. In this study, we report the function of SimC7. We isolated the entire ~72 kb sim cluster on a single phage artificial chromosome (PAC) clone and produced simocyclinone heterologously in a Streptomyces coelicolor strain engineered for improved antibiotic production. Deletion of simC7 resulted in the production of a novel simocyclinone, 7-oxo-SD8, which unexpectedly carried a normal tetraene linker but was altered in the angucyclinone moiety. We demonstrate that SimC7 is an NAD(P)H-dependent ketoreductase that catalyses the conversion of 7-oxo-SD8 into SD8. 7-oxo-SD8 was essentially inactive as a DNA gyrase inhibitor, and the reduction of the keto group by SimC7 was shown to be crucial for high affinity binding to the enzyme. Thus SimC7 is an angucyclinone ketoreductase that is essential for the biological activity of simocyclinone.