Prodiginines are a large family of pigmented oligopyrrole antibiotics with medicinal potential as immunosuppressants and antitumour agents that are produced by several actinomycetes and other eubacteria. Recently, a gene cluster in Streptomyces coelicolor encoding the biosynthesis of undecylprodiginine and butyl-meta-cycloheptylprodiginine has been sequenced. Using sequence comparisons, functions have been assigned to the majority of the genes in the cluster, several of which encode homologues of enzymes involved in polyketide, non-ribosomal peptide, and fatty acid biosynthesis. Based on these assignments, a complete pathway for undecylprodiginine and butyl-meta-cycloheptylprodiginine biosynthesis in S. coelicolor has been deduced. Gene knockout experiments have confirmed the deduced roles of some of the genes in the cluster. The analysis presented provides a framework for a general understanding of the genetics and biochemistry of prodiginine biosynthesis, which should stimulate rational approaches to the engineered biosynthesis of novel prodiginines with improved immunosuppressant or antitumour activities. In addition, new mechanisms for chain initiation and termination catalysed by hitherto unobserved domains in modular multienzyme systems have been deduced.