Viridicatumtoxin (1) is a tetracycline-like fungal meroterpenoid with a unique, fused spirobicyclic ring system. Puzzlingly, no dedicated terpene cyclase is found in the gene cluster identified in Penicillium aethiopicum. Cytochrome P450 enzymes VrtE and VrtK in the vrt gene cluster were shown to catalyze C5-hydroxylation and spirobicyclic ring formation, respectively. Feeding acyclic previridicatumtoxin to Saccharomyces cerevisiae expressing VrtK confirmed that VrtK is the sole enzyme required for cyclizing the geranyl moiety. Thus, VrtK is the first example of a P450 that can catalyze terpene cyclization, most likely via initial oxidation of C17 to an allylic carbocation. Quantum chemical modeling revealed a possible new tertiary carbocation intermediate E that forms after allylic carbocation formation. Intermediate E can readily undergo concerted 1,2-alkyl shift/1,3-hydride shift, either spontaneously or further aided by VrtK, followed by C7 Friedel-Crafts alkylation to afford 1. The most likely stereochemical course of the reaction was proposed on the basis of the results of our computations.