Phoslactomycins (PLMs), potent and selective inhibitors of serine threonine phosphatases, are of interest for their antitumor and antiviral activity. Multiple analogs and low titers in the fermentation process have hampered the development of this class of natural products. The entire 75-kb PLM biosynthetic gene cluster of Streptomyces sp. HK-803 was cloned, sequenced, and analyzed. The loading domain and seven extension modules of the PLM polyketide synthase generate an unusual linear unsaturated polyketide chain containing both E- and Z-double bonds from a cyclohexanecarboxylic acid (CHC) primer. Hydroxylation of the CHC-derived side chain of the resulting PLM-B by PlmS2, and a subsequent esterification, produces the remaining PLM analogs. A new PCR targeting technology allowed rapid and facile allelic replacement of plmS2. The resulting mutant selectively produced the PLM-B, at 6-fold higher titers than the wild type strain. This mutant and the biosynthetic gene cluster will facilitate engineered microbial production of hybrid PLMs with improved properties.