<jats:title>ABSTRACT</jats:title> <jats:p> <jats:named-content xmlns:xlink="http://www.w3.org/1999/xlink" content-type="genus-species" xlink:type="simple">Streptomyces griseus</jats:named-content> contains the <jats:italic>srs</jats:italic> operon, which is required for phenolic lipid biosynthesis. The operon consists of <jats:italic>srsA</jats:italic> , <jats:italic>srsB</jats:italic> , and <jats:italic>srsC</jats:italic> , which encode a type III polyketide synthase, an <jats:italic>O</jats:italic> -methyltransferase, and a flavoprotein hydroxylase, respectively. We previously reported that the recombinant SrsA protein synthesized 3-(13′-methyltetradecyl)-4-methylresorcinol, using <jats:italic>iso</jats:italic> -C <jats:sub>16</jats:sub> fatty acyl-coenzyme A (CoA) as a starter substrate and malonyl-CoA and methylmalonyl-CoA as extender substrates. An <jats:italic>in vitro</jats:italic> SrsA reaction using [ <jats:sup>13</jats:sup> C <jats:sub>3</jats:sub> ]malonyl-CoA confirmed that the order of extender substrate condensation was methylmalonyl-CoA, followed by two extensions with malonyl-CoA. Furthermore, SrsA was revealed to produce an alkylresorcylic acid as its direct product rather than an alkylresorcinol. The functional SrsB protein was produced in the membrane fraction in <jats:named-content xmlns:xlink="http://www.w3.org/1999/xlink" content-type="genus-species" xlink:type="simple">Streptomyces lividans</jats:named-content> and used for the <jats:italic>in vitro</jats:italic> SrsB reaction. When the SrsA reaction was coupled, SrsB produced alkylresorcinol methyl ether in the presence of <jats:italic>S</jats:italic> -adenosyl- <jats:sc>l</jats:sc> -methionine (SAM). SrsB was incapable of catalyzing the <jats:italic>O</jats:italic> -methylation of alkylresorcinol, indicating that alkylresorcylic acid was the substrate of SrsB and that SrsB catalyzed the conversion of alkylresorcylic acid to alkylresorcinol methyl ether, namely, by both the <jats:italic>O</jats:italic> -methylation of the hydroxyl group (C-6) and the decarboxylation of the neighboring carboxyl group (C-1). <jats:italic>O</jats:italic> -methylated alkylresorcylic acid was not detected in the <jats:italic>in vitro</jats:italic> SrsAB reaction, although it was presumably stable, indicating that <jats:italic>O</jats:italic> -methylation did not precede decarboxylation. We therefore postulated that <jats:italic>O</jats:italic> -methylation was coupled with decarboxylation and proposed that SrsB catalyzed the feasible SAM-dependent decarboxylative methylation of alkylresorcylic acid. To the best of our knowledge, this is the first report of a methyltransferase that catalyzes decarboxylative methylation.