<jats:title>Abstract</jats:title><jats:p>Hygrocins are naphthoquinone ansamycins with significant antitumor activities. Here, we report the identification and characterization of the hygrocin biosynthetic gene cluster (hgc) in <jats:italic>Streptomyces</jats:italic> sp. LZ35. A biosynthetic pathway is proposed based on bioinformatics analysis of the <jats:italic>hgc</jats:italic> genes and intermediates accumulated in selected gene disruption mutants. One of the steps during the biosynthesis of hygrocins is a Baeyer–Villiger oxidation between C5 and C6, catalyzed by luciferase‐like monooxygenase homologue Hgc3. Hgc3 represents the founding member of a previously uncharacterized family of enzymes acting as Baeyer–Villiger monooxygenases.